It has been about a month since the last earnings report for Comstock Resources, Inc. (NYSE:CRK) . Shares have added about 7.4% in that time frame.
Will the recent positive trend continue leading up to its next earnings release, or is CRK due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Recent Earnings
Comstock Resources reported fourth-quarter 2017 loss of 31 cents per share (excluding one-time items), narrower than the Zacks Consensus Estimate of a loss of 94 cents. The better-than-expected results were driven by growth in natural gas production. Further, Comstock’s quarterly loss also significantly narrowed from the year-ago adjusted loss of $2.58 per share.
Quarterly revenues increased to $73.2 million from $48.5 million a year ago, driven by higher natural gas sales. Revenues from natural gas sales jumped 75.4% to $61.2 million in the quarter under review. The top line was also slightly above the Zacks Consensus Estimate of $72 million.
Volume Analysis
Comstock’s quarterly volume was 23.5 billion cubic feet equivalent (Bcfe), 67.4% higher compared with 14 Bcfe in the prior-year quarter. Natural gas output, constituting 94.5% of total production, increased 81.2% whereas oil output plunged 27.7% in the reported quarter. Growth in natural gas production is attributable to the company's successful Haynesville shale drilling program.
Price Realizations
Average oil price realization (before hedging) was $56.48 per barrel, compared with $45.96 in fourth-quarter 2016. Average natural gas realization was $2.76 per thousand cubic feet/Mcf compared with $2.85 per Mcf in the year-earlier quarter.
Costs & Expenses
Total operating expenses soared 79.5% from fourth-quarter 2016 figure to $97.5 million primarily due to higher impairment charges. Impairment charges on oil and gas properties rose a whopping 1,617% to stand at $44 million in the quarter under review. Production taxes increased 90.2% to come in at $1.6 million in the reported quarter. Gathering/Transportation and depreciation costs also witnessed a year-over-year increase in the fourth quarter of 2017. These were partially offset by lease operating and general/administrative expenses, which decreased in the reported quarter.
Cash Flow & EBITDAX
Comstock’s operating cash inflow from continuing operations were $37.6 million. This compared favorably with the operating cash inflow of about $9.2 million in the fourth quarter of 2016. EBITDAX from continuing operations increased significantly. The metric surged 105.5% year over year to $56 million.
Capital Expenditure & Balance Sheet
In the reported quarter, Comstock’s capital expenditure amounted $49 million compared with $22.9 million in the year-ago quarter. The company spent $42.9 million on development drilling activities. As of Dec 31, 2017, the company had $61.3 million in cash and cash equivalents and $1,110.5 million in long-term debt.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates. There has been one revision higher for the current quarter compared to two lower.
Comstock Resources, Inc. Price and Consensus
Comstock Resources, Inc. Price and Consensus | Comstock Resources, Inc. Quote
VGM Scores
At this time, CRK has a strong Growth Score of A, though it is lagging a lot on the momentum front with an F. However, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Our style scores indicate that the stock is more suitable for growth investors than value investors.
Outlook
Estimates have been broadly trending downward for the stock and the magnitude of these revisions indicates a downward shift. Notably, CRK has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Comstock Resources, Inc. (CRK): Free Stock Analysis Report
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