Published on 29 Jan 2024 on Zacks via Yahoo Finance
Expect an Earnings Beat From These 4 Energy Companies in Q4
The fourth-quarter 2023 earnings cycle is here, with quite a few Oil/Energy companies having reported results. Experts are warning that the earnings season might not be smooth sailing, as commodity prices have fallen considerably from the year-ago levels.However, the doom and gloom may be overstated. To date, results have been above par, with beat percentages remaining impressive. In fact, the majority of energy firms have come out with a better-than-expected bottom line.Based on our exclusive research and unique market insight, we present four stocks — Oceaneering International OII, USA Compression Partners USAC, Evolution Petroleum Corporation EPM and TC Energy Corporation TRP — to take advantage of the positive post-announcement price reaction. But it’s worth taking a look at the factors influencing the quarterly results this time around first.
Revenue & Earnings Comparison Relative to Q4 of 2022
Investors should know that there is a high correlation between commodity prices and the earnings of energy companies.So, how does the price of oil and gas compare with the year-ago period?According to the U.S. Energy Information Administration, in October, November and December of 2022, the average monthly WTI crude price was $87.55, $84.37 and $76.44 per barrel, respectively. Average prices were $85.64 in October, $77.69 in November and $71.90 in December, i.e., weaker year over year.The news is even more bearish on the natural gas front. In Q4 of 2022, U.S. Henry Hub average natural gas prices were $5.66 per MMBtu in October, $5.45 in November and $5.53 in December. The fuel traded at $2.98, $2.71 and $2.53 per MMBtu in October, November and December, respectively. In other words, natural gas traded noticeably lower in all three months.Considering the drop in oil and gas prices, the picture looks rather downbeat for the Q4 earnings season. Per the latest Earnings Trends, energy is on track for a big earnings decline compared to a year earlier. Per our expectations, the sector’s bottom line is likely to have slumped 26.6% from fourth-quarter 2022 on 9.1% lower revenues.