| Hess Corporation's (HES) Q1 Earnings: What's in Store? - Analyst Blog | |
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Hess Corporation HES is expected to report first-quarter 2015 earnings on Apr 29, before the market opens.
In the last quarter, the company’s earnings from continuing operations of 18 cents per share missed the Zacks Consensus Estimate of 28 cents. The quarter's results also decreased 81.6% from the year-ago earnings of 98 cents per share. Let’s see how things are shaping up prior to the announcement.
Factors Likely to Affect Earnings
Hess is undergoing transition from an integrated oil and gas company to a predominantly E&P entity, thereby shifting its growth approach from high-impact exploration to low-risk unconventionals, and a smaller, more focused exploration portfolio. The company has already divested its downstream businesses, which include energy marketing, terminals, retail marketing and refining operations. In view of the global economic slowdown and new refining capacity entering the world market, the aforesaid decisions will help enhance Hess’ shareholder value in the first quarter. This is also expected to reflect positively on the company’s earnings.
Hess’ priority remains investment in future growth with a balanced approach between unconventional, exploitation and exploration. Such an investment is expected to realize an average annual production growth of 5%–8% through 2017 and beyond. With growing free cash flow over the years, Hess will be able to increase its share buyback as well as dividend. This will enhance shareholder value during the quarter. Hess remains on track with its multi-year transformation program. However, to support its capital expenditures through 2015, the company continues to be highly dependent on major asset sales. Hence, the company’s growth and returns picture will likely be hindered by the asset sale programs in the near term.
The weak price environment reduces Hess’ ability to generate cash flow and consequently, production and reserve growth. The company's earnings depend on the strength of refining margins in the U.S. and are likely to be affected by fluctuations in the margins.
Earnings Whispers
Our proven model does not conclusively show that Hess is likely to beat earnings this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank of #1, 2 or 3 for this to happen. 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 0.95%. This is because the Most Accurate estimate stands at -$1.04, whereas the Zacks Consensus Estimate is pegged at a loss of $1.05. This implies a likely positive earnings surprise for this company.
Zacks Rank: Hess carries a Zacks Rank #4 (Sell), which lowers the predictive power of ESP. We caution against Sell-rated stocks (Zacks Ranks #4 and 5) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Other Stocks to Consider
Here are some other companies from the energy sector that, according to our model, have the right combination of elements to post an earnings beat this quarter:
Marathon Petroleum Corp. MPC has an Earnings ESP of +1.77% and a Zacks Rank #1 (Strong Buy).
Energy Transfer Equity, L.P. ETE has an Earnings ESP of +27.27% and a Zacks Rank #1.
Spectra Energy Partners LP SEP has an Earnings ESP of +2.53% and a Zacks Rank #3. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report HESS CORP (HES): Free Stock Analysis Report ENERGY TRAN EQT (ETE): Free Stock Analysis Report SPECTRA EGY PTR (SEP): Free Stock Analysis Report MARATHON PETROL (MPC): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research
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Hess Corporation
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CODE : HES |
ISIN : US42809H1077 |
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ProfileMarket IndicatorsVALUE : Projects & res.Press releasesAnnual reportRISK : Asset profileContact Cpy |
Hess Corp. is a and oil exploration company based in United states of america. Hess Corp. is listed in Germany and in United States of America. Its market capitalisation is US$ 42.1 billions as of today (€ 37.8 billions). Its stock quote reached its lowest recent point on November 17, 1989 at US$ 10.06, and its highest recent level on September 19, 2024 at US$ 133.50. Hess Corp. has 315 053 615 shares outstanding. |