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Why Continental (CLR) is Likely to Deliver Q3 Earnings Beat

Continental Resources' (CLR) third-quarter earnings are likely to have been boosted by higher oil and gas prices.

This story originally appeared on Zacks

Continental Resources, Inc. CLR is set to continue its earnings beat streak for third-quarter 2021, whose results are set to be released on Nov 3, after the closing bell.  

- Zacks

In the last reported quarter, the upstream company announced adjusted earnings of 91 cents per share, beating the Zacks Consensus Estimate of 57 cents due to increased production volumes and higher realizations of commodity prices.

In the trailing four quarters, Continental Resources’ earnings beat the Zacks Consensus Estimate thrice and missed the same on another occasion. This is depicted in the graph below:

Let’s see how things have shaped up prior to the third-quarter earnings announcement.

Trend in Estimate Revision

The Zacks Consensus Estimate for third-quarter earnings per share of $1.22 has witnessed seven upward revisions and one downward movement over the past 60 days. The figure indicates a massive improvement from the year-ago loss of 16 cents per share.

The consensus estimate for third-quarter revenues of $1.4 billion indicates a 102.1% increase from the year-ago reported figure.

What the Quantitative Model Suggests

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

Earnings ESP: Earnings ESP for the company is currently +0.90%. This is because the Most Accurate Estimate is pegged at $1.23 per share, higher than the Zacks Consensus Estimate of $1.22. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.  

Zacks Rank: Continental currently holds a Zacks Rank #1.

Factors Driving the Better-Than-Expected Earnings

Favorable prices of crude oil and natural gas are primarily expected to have positively impacted the bottom line of Continental — one of the leading hydrocarbon producers in the Bakken play — in the third quarter. The Zacks Consensus Estimate for third-quarter oil price is pegged at $66 per barrel, signaling a massive jump from the year-ago level of $35.93. Also, the same for average natural gas price is pegged at $4.35 per thousand cubic feet, indicating a rise from 98 cents in the year-ago quarter.

The company stated earlier that third-quarter total production averaged 331.4 thousand barrels of oil equivalent per day (MBoe/d), reflecting an increase from the year-ago level of 297 MBoe/d. Even though oil production is expected to have declined in the quarter, natural gas output has likely risen significantly. The effects of a significant improvement in oil and natural gas prices along with increased overall production volumes are expected to have positioned the company for an earnings beat.

Other Stocks to Consider

Here are some other companies from the Energy space that you may also want to consider, as our model shows that these too have the right combination of elements to post an earnings beat in the upcoming quarterly reports:

MPLX LP MPLX has an Earnings ESP of +3.81% and a Zacks Rank of 2. It is scheduled to report third-quarter results on Nov 2. You can see the complete list of today’s Zacks #1 Rank stocks here.

EOG Resources, Inc. EOG has an Earnings ESP of +2.16% and is a Zacks #1 Ranked player. The company is scheduled to release third-quarter results on Nov 4.

Targa Resources Corp. TRGP has an Earnings ESP of +4.00% and a Zacks Rank #1. The firm is scheduled to release quarterly earnings on Nov 4.

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