A month has gone by since the last earnings report for Range Resources (RRC). Shares have added about 2.4% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Range Resources 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 catalysts.
Range Resources Q3 Earnings and Revenues Beat Estimates
Range Resources Corporation (NYSE:RRC) recently reported third-quarter 2018 earnings (adjusted for one-time items) of 26 cents per share, beating the Zacks Consensus Estimate of 18 cents. The bottom line surged 420% from the year-ago quarter’s figure of 5 cents.
Earnings in third-quarter 2018 were boosted by increase in oil and gas equivalent production as well as price realizations, partially offset by higher expenses.
Total revenues of $811.2 million beat the Zacks Consensus Estimate of $721 million. Moreover, the top line surged 683% year over year from $482 million in the prior-year quarter.
Operational Performance
Production
During the third quarter, the company’s production touched record level of around 2,266.7 million cubic feet equivalent per day (MMcfe/d). Natural gas contributed 67.5% to the total production, while natural gas liquids (NGLs) and oil accounted for the remaining 32.5%.
Total production improved 14% from the year-ago quarter’s tally and surpassed the Zacks Consensus Estimate of 2,220 MMcfe/d, primarily owing to improvement in the Appalachia division.
On a year-over-year basis, oil production declined 19%, while NGL production rose 15%. Natural gas production jumped 16% year over year.
Price Realization
The company’s total price realization (including the effects of hedges and derivative settlements) averaged $1.90 per thousand cubic feet equivalent (Mcfe), up 5% from the prior-year quarter’s figure. Of this, NGL prices surged 40% to $11.92 per barrel and crude oil prices rose 8% to $52.33 per barrel, both on a year-over-year basis. However, natural gas prices were down 2% year over year to $1.56 per Mcf.
Expenses
Direct operating costs in the third quarter was $30.4 million, down 16.4% from the year-ago quarter’s tally. Total expenses were $738.5 million, up 8% year over year.
Financials
At the end of the quarter, the company had a total debt of approximately $4,160.9 million, with a debt-to-capitalization ratio of 41.7%. The company’s expenditure totaled $191 million in the third quarter for drilling and completion of 24 net wells.
Guidance
For the fourth quarter of 2018, the company projects production between 2,255-2,265 Mmcfe per day. Given this, the annual output is likely to rise 11%.
The upstream energy player reiterated 2018 capital budget of $941 million. The budget will be funded by the company’s cash flow.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates. The consensus estimate has shifted 12.18% due to these changes.
VGM Scores
At this time, Range Resources has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with a C. However, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending downward for the stock, and the magnitude of these revisions looks promising. Notably, Range Resources has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Range Resources Corporation (RRC): Free Stock Analysis Report
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