Domestic oil and gas explorer Energy XXI Ltd. EXXI is expected to release fourth-quarter fiscal 2015 results on Sep 14, before the start of the trading session.
In the last reported quarter, the company missed the Zacks Consensus Estimate by 6 cents. In fact, Energy XXI failed to meet estimates in three of the trailing four quarters, with an average negative surprise of 67.29%.
Let’s see how things are shaping up for this announcement.
Factors to Consider
Being a firm in the oil and gas exploration and production industry, Energy XXI’s revenues, earnings and cash flows are expected to remain challenged by low commodity prices. Energy XXI, like most of its peers has been lowering capital spending to tackle this pricing weakness.
What is interesting to note is that despite the reduced spending, the company expects to maintain production estimates. An increase in production volumes could partially offset the pricing woes.
However, we expect the company to incur a loss of $1.27 per share in the upcoming quarterly results. This compares unfavorably with the prior-year quarter earnings of 20 cents per share.
Earnings Whispers
Our proven model does not conclusively show that Energy XXI is likely to beat the Zacks Consensus Estimate this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 or 3 for this to happen. Unfortunately, this is not the case here as elaborated below.
Zacks ESP: Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is 0.00% for Energy XXI. This is because both the Most Accurate estimate and Zacks Consensus Estimate are pegged at a loss of $1.27.
Zacks Rank: Energy XXI has a Zacks Rank #4 (Sell).
We caution investors against Sell-rated stocks (Zacks Ranks #4 or 5) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks to Consider
Some stocks in the energy sector that have both a positive Earnings ESP and a favorable Zacks Rank are:
Tesoro Corporation TSO with an Earnings ESP of +13.97% and a Zacks Rank #1 (Strong Buy). The company is expected to release earnings on Oct 29.
Marathon Petroleum Corporation MPC with an Earnings ESP of +9.62% and a Zacks Rank #3 (Hold). The company is slated to release earnings on Oct 29.
MPLX LP MPLX with an Earnings ESP of +5.46% and a Zacks Rank #3. The company is scheduled to release earnings on Oct 29.
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TESORO CORP (TSO): Free Stock Analysis Report
ENERGY XXI LTD (EXXI): Free Stock Analysis Report
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MPLX LP (MPLX): Free Stock Analysis Report
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