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Is a Beat in Store for Pioneer Natural (PXD) in Q3 Earnings?

Zacks Equity Research
Updated

Pioneer Natural Resources Company PXD is scheduled to report third-quarter 2017 earnings on Nov 1, after the closing bell.

Last quarter, the company posted an average positive earnings surprise of 90.91%. Also, for the last four quarters, Pioneer Natural’s average positive surprise was 46.74%.

Which Way Are the Estimates Headed?

Let’s take a look at the estimate revision trend in order to get a clear picture of analyst opinion on the stock before the earnings release.

The Zacks Consensus Estimate of 29 cents for third-quarter earnings has been revised upward over the last 30 days, with eight firms being bullish and five firms taking a bearish stance. The consensus estimate reflects a year-over-year improvement of 120.8%.

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Why a Likely Positive Surprise?

Our proven model shows that Pioneer Natural is likely to beat earnings because it has the right combination of two key ingredients.    

Zacks ESP: Pioneer Natural’s Earnings ESP is +2.77%. A favorable ESP serves as a meaningful and leading indicator of a likely positive surprise. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.      

Zacks Rank: Pioneer Natural currently has a Zacks Rank #3 (Hold). Note that stocks with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 has a significantly higher chance of beating earnings estimates.  

Conversely, Sell-rated stocks (Zacks Rank #4 or 5) should never be considered going into an earnings announcement.

The combination of Pioneer Natural’s Zacks Rank #3 and +2.77% ESP makes us reasonably optimistic of an earnings beat.  

What’s Driving the Better-than-Expected Earnings?

On Oct 12, Pioneer Natural announced that its total production came in at 275.7 thousand barrels oil equivalent per day (MBOE/D) in the third quarter, representing an increase of 6.4% sequentially and 15.4% year over year. Higher activities in the Wolfcamp and Spraberry plays of Permian Basin primarily supported the upside. 

However, total output failed to beat the Zacks Consensus Estimate of 278 MBOE/D, thanks to lower activities in the Raton basin.

Along with the production update, Pioneer Natural reported realized crude and natural gas prices of $45.35 per barrel and $2.58 per thousand cubic feet, respectively. The reported prices for both the commodities are higher than year-ago quarter.

Given the higher production and commodity price realizations, we expect the company to solid third-quarter numbers.

Q3 Price Outperformance

During the quarter, Pioneer Natural lost 7.5%, underperforming the industry’s 5.1% gain.

 

 

Other Stocks to Consider

Here are some other companies you may want to consider as our model shows that these have the right combination of elements to post an earnings beat this quarter:

Denbury Resources Inc. DNR, headquartered in Plano, TX, is a leading exploration and production player. The company has an Earnings ESP of +11.11% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Tesoro Corporation ANDV, based in San Antonio, TX, is a leading refining player. The company has an Earnings ESP of +5.02% and a Zacks Rank #3.

Canadian Natural Resources Limited CNQ, a Calgary-based upstream energy firm, has an Earnings ESP of +1.08% and a Zacks Rank #2.

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Canadian Natural Resources Limited (CNQ) : Free Stock Analysis Report
 
Pioneer Natural Resources Company (PXD) : Free Stock Analysis Report
 
Denbury Resources Inc. (DNR) : Free Stock Analysis Report
 
Tesoro Corporation (ANDV) : Free Stock Analysis Report
 
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