February 20th marks the awaited release of Diamondback Energy’s Q4 results, with an anticipated profit of $4.60 per share on revenues of $2.2 billion. But to properly gauge the potential impact of this report, it’s crucial to first dissect FANG’s performance in the previous quarter.
The Last Quarter’s Performance and Surprise History
In Q3, this Midland, TX-based drilling and production company surpassed expectations, reporting an adjusted EPS of $5.49 while also exceeding revenue estimates by 7.5%. Over the last year, FANG beat earnings estimates twice, missed twice, and averaged an earnings surprise of 0.4%.
Diving Into Estimates and Forecasts
Estimates for the upcoming quarter show a 2.5% downward revision on the bottom line, with a projected 13% decrease in earnings compared to the previous year. Conversely, revenue estimates suggest a 6.9% increase from the same period, indicating contrasting viewpoints on what the future may hold.
Key Factors at Play
With a robust inventory of drill-ready sites in the Permian Basin, Diamondback Energy is expected to have experienced growth in its production volume, projecting an increase of 17.3% year over year. However, rising operational costs may have cast a shadow on the company’s bottom line, as expenses are predicted to surge by 17.4% in the same period.
Expectations versus Reality
Analysis using the Zacks model implies uncertainity regarding FANG’s potential to surpass estimates. While the Earnings ESP stands at +0.18%, the current Zacks Rank settles at #4 (Sell), raising doubts about its ability to outperform expectations.
Alternative Investment Options
Considering FANG’s unpredictability, investors may opt to explore other energy sector opportunities such as Cheniere Energy (LNG), Suncor Energy (SU), and APA Corporation (APA), all with varying Earnings ESPs and Zacks Ranks.
Each of these alternative options presents its own set of risk-and-return potential and is a variable worth considering when crafting your investment strategy.
It’s no secret that the investing world is rife with unpredictability and complexity, and it seems the energy sector is no exception. As the earnings season unfolds, astute investors keep a watchful eye, ready to carefully select their next financial moves. Let’s keep our fingers crossed for a bountiful quarter!
