Domestic energy explorer Apache Corp. APA is set to release first-quarter 2017 results, before the opening bell on Thursday, May 4.
In the preceding three-month period, the Houston, TX-based company reported adjusted loss per share of 6 cents, which compared unfavorably with the Zacks Consensus Estimate of earnings of 6 cents. The underperformance stemmed from a decline in output due to a conservative capital budget.
Apache’s earnings surprise history is disappointing. The company missed estimates in two of the last four quarters with an average negative surprise of 19.89%.
Let’s see how things are shaping up for this announcement.
Factors to Consider This Quarter
Compared with year-earlier quarter, the pricing scenario of oil was much better during the first quarter, courtesy of the historic OPEC production cut agreement. Natural gas prices too improved from the January–March quarter of 2016.
Undoubtedly, these factors were favorable for oil and gas exploration players like Apache as the company was able to sell the commodities at higher prices. Moreover, the company is expected to report an increase in first-quarter production. This is due to the resurgence of shale players in the U.S oil and gas patches as evidenced by the increasing rig count data of Baker Hughes Inc. BHI.
However, the company’s debt picture is slightly discouraging. Debt-to-capitalization ratio of Apache is 52.7%, which is higher than 51.9% for the Zacks categorized Oil & Gas-U.S Exploration & Production industry.
Q1 Price Performance
Apache’s share price performance of during January–March quarter of this year was disappointing. During the period, the company’s shares underperformed the Oil & Gas-U.S Exploration & Production industry. Shares lost 19% compared with 11% decrease for the broader industry.
Earnings Whispers
Our proven model does not conclusively show that Apache will beat estimates this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) to be able to beat estimates. That is not the case here as you will see below.
Zacks ESP: Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is -11.11%. This is because the Most Accurate estimate stands at 16 cents, while the Zacks Consensus Estimate is pegged higher at 18 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.