Newfield (NFX) Down 3.3% Since Last Earnings Report: Can It Rebound?

A month has gone by since the last earnings report for Newfield Exploration (NFX). Shares have lost about 3.3% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Newfield due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.

Second-Quarter 2018 Results

Newfield Exploration reported adjusted second-quarter 2018 earnings of 94 cents per share, which beat the Zacks Consensus Estimate of 81 cents. The company had reported adjusted profit of 43 cents in the year-ago quarter.

Total revenues amounted to $679.0 million, up from $402.0 million in the year-ago quarter. The figure surpassed the Zacks Consensus Estimate of $614 million.

The upside can be primarily attributed to outstanding performance at the Anadarko Basin.

Operational Performance

Total quarterly production of 17.8 million barrels of oil equivalent (MMBoe) was up from 13.6 MMBoe in the year earlier quarter. It comprised 42% oil, 22% natural gas liquids (NGLs) and 36% natural gas.

Natural gas volumes totaled 38.4 billion cubic feet (bcf), which beat the Zacks Consensus Estimate of 37.41 bcf. Oil, condensate and NGLs volumes came in at 11.4 million barrels.

Newfield’s second-quarter oil and natural gas price realizations (including the effect of hedges) averaged $38.15 per barrel of oil equivalent. Natural gas prices were $2.22 per thousand cubic feet (mcf), missing the Zacks Consensus Estimate of $2.46 per mcf. Oil prices were $64.28 per barrel, beating the Zacks Consensus Estimate of $60 per barrel. NGLs prices were $28.82 per barrel, which missed the Zacks Consensus Estimate of $29.49 per barrel.

Financials

At the end of the quarter, Newfield had cash balance of $293.0 million. Long-term debt was $2,435 million, which represents a debt-to-capitalization ratio of approximately 59.7%.

Guidance

For 2018, Newfield raised output guidance to 180-190 MBoe/d from 175-185 MBoe/d. Capital expenditure is estimated at $1,350 million, up from the previous guidance of $1,300 million. Of the total production, Anadarko Basin expects output in the range of 125-135 MBoe/d.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in fresh estimates.

VGM Scores

Currently, Newfield has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with a D. However, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.

Zacks style scores indicate that the company's stock is suitable for value and growth investors.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions has been net zero. Notably, Newfield has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

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