Subscribe to Entrepreneur for $5
Subscribe

Magnolia (MGY) Q3 Earnings Preview: Here's What to Expect

Magnolia Oil & Gas (MGY) beat the Zacks Consensus Estimate in each of the last four quarters, delivering an earnings surprise of 39.27%, on average.

By
This story originally appeared on Zacks

Magnolia Oil & Gas Corporation MGY is set to release third-quarter results on Nov 2. The current Zacks Consensus Estimate for the to-be-reported quarter is a profit of 60 cents per share on revenues of $276.85 million.



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

- Zacks

Highlights of Q2 Earnings & Surprise History

In the last-reported quarter, the Houston, TX-based upstream player beat the consensus better-than-anticipated production volumes. The South Texas-focused company’s average daily oil output of 31,897 barrels per day surpassed the Zacks Consensus Estimate of 30,734 barrels. Magnolia had reported adjusted earnings per share of 56 cents that went past the Zacks Consensus Estimate of 37 cents. The company’s quarterly revenues of $250.7 million also outperformed the Zacks Consensus Estimate by 9.3%.



Magnolia beat the Zacks Consensus Estimate in each of the last four quarters, delivering an earnings surprise of 39.27%, on average. This is depicted in the graph below:

 

Magnolia Oil & Gas Corp Price and EPS Surprise

Magnolia Oil & Gas Corp Price and EPS Surprise

Magnolia Oil & Gas Corp price-eps-surprise | Magnolia Oil & Gas Corp 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 900% surge year over year. The Zacks Consensus Estimate for revenues, meanwhile, suggests a 128.7% increase from the year-ago period.

Factors to Consider

Magnolia is expected to have benefited from the surge in oil and natural gas prices. As a reflection of this price boost, the Zacks Consensus Estimate for the third-quarter average sales price for crude and natural gas is pegged at $68 a barrel and $3.54 per thousand cubic feet, respectively, significantly higher than the year-ago levels of $38.5 and $1.58. The year-over-year improvement in realizations has most likely buoyed Magnolia’s revenues and cash flows.



But on a somewhat bearish note, the company is likely to have faced a sequential decline in oil production due to a constrained capital budget. The Zacks Consensus Estimate for Magnolia’s average third-quarter crude output is pegged at 31,678 barrels per day, indicating a drop from the previous quarter’s 31,897 barrels per day. This might have impacted Magnolia’s results in the September quarter.

What Does Our Model Say?

The proven Zacks model does not conclusively show that Magnolia Oil & Gas is likely to beat estimates in the third quarter. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of beating estimates. But that’s not the case here.



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



Earnings ESP: Earnings ESP, which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate, for this company is -3.33%.



Zacks Rank: Magnolia currently carries a Zacks Rank #1.



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

Stocks to Consider

While an earnings beat looks uncertain for Magnolia Oil & Gas, here are some firms from the energy 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.



Bitcoin, Like the Internet Itself, Could Change Everything

Blockchain and cryptocurrency has sparked one of the most exciting discussion topics of a generation. Some call it the “Internet of Money” and predict it could change the way money works forever. If true, it could do to banks what Netflix did to Blockbuster and Amazon did to Sears. Experts agree we’re still in the early stages of this technology, and as it grows, it will create several investing opportunities.

Zacks’ has just revealed 3 companies that can help investors capitalize on the explosive profit potential of Bitcoin and the other cryptocurrencies with significantly less volatility than buying them directly. 

See 3 crypto-related stocks now >>



Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

 

ConocoPhillips (COP): Free Stock Analysis Report

 

APA Corporation (APA): Free Stock Analysis Report

 

Gulfport Energy Corporation (GPOR): Free Stock Analysis Report

 

Magnolia Oil & Gas Corp (MGY): Free Stock Analysis Report

 

To read this article on Zacks.com click here.

 

Zacks Investment Research