Ovintiv Inc. OVV is set to release third-quarter results on Nov 8. The current Zacks Consensus Estimate for the to-be-reported quarter is a profit of $1.98 per share on revenues of $2.5 billion.
Let’s delve into the factors that might have influenced the independent energy producer’s results in the September quarter. But it’s worth taking a look at OVV’s previous-quarter performance first.
Highlights of Q2 Earnings & Surprise History
In the last reported quarter, the Denver, CO-based upstream player missed the consensus mark due to a year-over-year dip in production and much higher costs. OVV had reported adjusted earnings per share of $2.42, below the Zacks Consensus Estimate of $2.69. However, revenues of $3.7 billion generated by the firm stormed past the Zacks Consensus Estimate of $2.7 billion on the back of higher price realizations.
Ovintiv missed the Zacks Consensus Estimate for earnings in two of the last four quarters, resulting in a negative earnings surprise of 7.5%, on average. This is depicted in the graph below:
Ovintiv Inc. Price and EPS Surprise
Ovintiv Inc. price-eps-surprise | Ovintiv Inc. Quote
Trend in Estimate Revision
The Zacks Consensus Estimate for the third-quarter bottom line has remained the same in the past seven days. The estimated figure indicates a 32% improvement year over year. The Zacks Consensus Estimate for revenues, meanwhile, suggests a 40.8% increase from the year-ago period.
Factors to Consider
Ovintiv is expected to have benefited from robust commodity price realizations. In the April-to-June period, the company’s realized natural gas price was $2.78 per thousand cubic feet compared with the year-ago level of $2.74. The realized oil price increased to $89.16 per barrel from $51.27 in the third quarter of 2021. The uptick is most likely to have continued in the third quarter, with oil and gas prices remaining strong on the back of geopolitical tensions and tight fundamentals. This price boost is likely to have buoyed the revenues and cash flows of OVV.
On a somewhat bearish note, the decrease in Ovintiv’s production might have dented the company’s to-be-reported bottom line as it pivots toward a steady output profile to stress on shareholder returns. Consequently, the consensus mark for OVV’s average Q3 volume is pegged at 503,000 barrels of oil equivalent per day (BOE/d), down from the prior-year quarter’s level of 535,300 BOE/d.
What Does Our Model Say?
The proven Zacks model does not conclusively show that Ovintiv 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: Ovintiv has an Earnings ESP of 0.00%. This is because the Most Accurate Estimate and the Zacks Consensus Estimate are pegged at $1.98 per share each.
Zacks Rank: OVV currently carries a Zacks Rank #3, which increases the predictive power of ESP. However, the company’s 0.00% ESP makes surprise prediction difficult this earnings season.
Stocks to Consider
While an earnings beat looks uncertain for Ovintiv, here are some firms from the energy space that you may want to consider on the basis of our model:
Helmerich & Payne, Inc. HP has an Earnings ESP of +14.32% and a Zacks Rank #1. The firm is scheduled to release earnings on Nov 16.
You can see the complete list of today’s Zacks #1 Rank stocks here.
For fiscal 2022, Helmerich & Payne has a projected earnings growth rate of 100%. Valued at around $5.3 billion, HP has edged up 46.7% in a year.
Smart Sand, Inc. SND has an Earnings ESP of +25.00% and a Zacks Rank #3. The firm is scheduled to release earnings on Nov 8.
For 2022, Smart Sand has a projected earnings growth rate of 85.1%. Valued at around $112.3 million, SND has gained 6.9% in a year.
Calumet Specialty Products Partners, L.P. CLMT has an Earnings ESP of +40.15% and a Zacks Rank #3. The firm is scheduled to release earnings on Nov 9.
Calumet Specialty Products Partners topped the Zacks Consensus Estimate by an average of 62% in the trailing four quarters, including a 92% beat in Q2. Valued at around $1.5 billion, CLMT has surged 44.3% in a year.
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