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This Is Why Comstock (CRK) is Set for Strong Q3 Earnings

Surging natural gas prices and higher production are likely to have boosted Comstock Resources' (CRK) profit levels in the third quarter.

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This story originally appeared on Zacks

Comstock Resources, Inc. CRK is set to release third-quarter results after the closing bell on Nov 2. The current Zacks Consensus Estimate for the to-be-reported quarter is a profit of 34 cents per share on revenues of $413.6 million.



Let’s delve into the factors that might have influenced the independent natural gas producer’s performance in the September quarter. But it’s worth taking a look at Comstock’s previous-quarter performance first.

- Zacks

Highlights of Q2 Earnings & Surprise History

In the last-reported quarter, the Frisco, TX-based upstream player beat the consensus mark, owing to higher-than-expected production. Output during the April-June period totaled 126,260 million cubic feet equivalent (Mmcfe), ahead of the Zacks Consensus Estimate of 122,600 Mmcfe. Comstock had reported adjusted earnings per share of 22 cents, ahead of the Zacks Consensus Estimate by 4 cents. Revenues of $343.7 million generated by the firm had also come in above the Zacks Consensus Estimate of $315 million.



Comstock beat the Zacks Consensus Estimate in three of the last four quarters and missed in the other, which resulted in a negative earnings surprise of 57.48%, on average. This is depicted in the graph below:

 

Comstock Resources, Inc. Price and EPS Surprise

Comstock Resources, Inc. Price and EPS Surprise

Comstock Resources, Inc. price-eps-surprise | Comstock Resources, Inc. Quote

 

Trend in Estimate Revision

The Zacks Consensus Estimate for the third-quarter bottom line remained the same in the last seven days. The estimated figure indicates a 666.7% surge year over year. The Zacks Consensus Estimate for revenues, meanwhile, suggests a 132.3% increase from the year-ago period.

Factors to Consider

Comstock Resources is expected to have benefited from the surge in natural gas prices. As a reflection of this price boost, the Zacks Consensus Estimate for the third-quarter average sales price is pegged at $3.74 per thousand cubic feet, more than double the year-ago level of $1.64. The year-over-year improvement in realizations has most likely buoyed Comstock’s revenues and cash flows.



One of the largest operators in the Haynesville shale has also done a fairly admirable job at increasing production. A low-cost provider, the company’s leadership position in Haynesville provides it access to the Gulf Coast and attractive pricing advantage. Comstock’s 1,900+ high-return net drilling locations support its development program. Echoing Comstock’s healthy production dynamics, the Zacks Consensus Estimate for the to-be-reported quarter’s total volume stands at 131,600 Mmcfe, implying a 25.7% increase from 104,687 Mmcfe in the July-September period of 2020. This is expected to have had a positive effect on the company’s third-quarter numbers.

Why a Likely Positive Surprise?

Our proven model predicts an earnings beat for Comstock this season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat.



You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.



Comstock has an Earnings ESP of +2.53% and a Zacks Rank #1.



You can see the complete list of today’s Zacks #1 Rank stocks here.

Other Stocks to Consider

Comstock is not the only energy company looking up this earnings cycle. Here are some other firms from the space that you may want to consider on the basis of our model:



Gulfport Energy Corporation GPOR has an Earnings ESP of +40% and a Zacks Rank #1. The firm is scheduled to release earnings on Nov 2.



ConocoPhillips COP has an Earnings ESP of +1.85% and is Zacks #1 Ranked. The firm is scheduled to release earnings on Nov 2.



APA Corporation APA has an Earnings ESP of +3.77% and a Zacks Rank #1. The firm is scheduled to release earnings on Nov 3.



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ConocoPhillips (COP): Free Stock Analysis Report

 

APA Corporation (APA): Free Stock Analysis Report

 

Comstock Resources, Inc. (CRK): Free Stock Analysis Report

 

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