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.
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.
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
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.
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