For Immediate Release
Chicago, IL – June 21, 2022 – Zacks Equity Research shares Phillips 66 PSX as the Bull of the Day and AutoHome ATHM as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Baker Hughes Co. BKR, Whiting Petroleum Corp. WLL and Continental Resources, Inc. CLR.
Here is a synopsis of all five stocks:
Bull of the Day:
It doesn't take a seasoned market professional to realize that oil companies are making a couple bucks. As the economy re-opened, refining capacity simply wasn't enough to keep up with all the fresh demand. That led to prices moving one way, up. It also led to analysts all over Wall Street pushing up their earnings estimates.
Stocks in this industry have gone absolutely hyperbolic. But recently, it looks like several of these have come back down to Earth. However, with earnings still moving in a positive direction, buying on this pullback could become a viable option.
Today's Bull of the Day is in this industry. I'm talking about Zacks Rank #1 (Strong Buy) Phillips 66. Phillips 66 operates as an energy manufacturing and logistics company. It operates through four segments: Midstream, Chemicals, Refining, and Marketing and Specialties (M&S).
The Oil and Gas – Refining and Marketing industry is in the Top 4% of our Zacks Industry Rank. Over the course of the last thirty days, four analysts have increased their earnings estimates for the current year while six have done so for next year. The bullish moves have popped up our Zacks Consensus Estimates for the current year from $7.41 to $12.19 while moving next year's number from $8.04 to $9.67.
That drop in earnings next year reflects the market's expectations for oil prices. That tells me that analysts are expecting oil prices to come down. If you look on the revenue side, the drop in earnings seems a bit more extreme than the drop in sales. Sales are forecast to drop 4.78% next year while earnings are set to drop 20.67%. I would like to point out though, that 60 days ago, analysts were only expecting to see $7.57 in profits, with next year at $8.04. The contraction for next year can be attributed to a banner year this year more than anything negative happening next year.
Bear of the Day:
The stock market has been in turmoil. Some industries have been beat down worse than others. For a time there, Chinese internet stocks were one of the worse places to be. Since May, there has been a bit of a turnaround in this downtrodden industry. Today's Bear of the Day investigates whether this bounce is warranted or if the earnings story is still not supportive of the bounce.
I'm talking about Zacks Rank #5 (Strong Sell) AutoHome. Autohome Inc. operates as an online destination for automobile consumers in the People's Republic of China. The company delivers interactive content and tools to automobile consumers through its three websites, autohome.com.cn, che168.com, and ttpai.cn on PCs, mobile devices, mobile applications, and mini apps. It provides media services, including automaker advertising services and regional marketing campaigns; and leads generation services comprising dealer subscription services, advertising services for individual dealers, and used automobile listing and other platform-based services.
This year has been a rough one for AutoHome. The current year Zacks Consensus Estimate calls for $2.33 EPS for this year. That is a contraction of 28%. Over the last sixty days, three analysts have cut their earnings estimates for the current year, while one has hiked estimates. That has dropped current year estimates down from $2.62. Next year's number is off from $3.13 to $2.68 as two analysts have cut estimates for next year.
The Internet – Services industry ranks in the Bottom 20% of our Zacks Industry Rank.
Permian Crude Rig Count Flat, Eagle Ford Increases
In its weekly release, Baker Hughes Co. reported that the U.S. rig count was higher than the prior-week tally. The rotary rig count, issued by BKR, is usually published in major newspapers and trade publications.
Baker Hughes' data, issued at the end of every week since 1944, helps energy service providers gauge the overall business environment of the oil and gas industry. The number of active rigs and its comparison with the prior-week figure indicates the demand trajectory for Baker Hughes' oilfield services from exploration and production companies.
Total U.S. Rig Count Rises: The count of rigs engaged in the exploration and production of oil and natural gas in the United States was 740 for the week ended Jun 17. The figure is higher than the prior week's count of 733. The current national rig count is higher than the year-ago level of 470.
The onshore rigs in the week ended Jun 17 totaled 721 compared with the prior week's count of 715. In offshore resources, 16 rigs were operating, higher than the prior-week count of 15.
U.S. Oil Rig Count Rises: Oil rig count was 584 for the week ended Jun 17, higher than the prior week's figure of 580. The current number of oil rigs — far from the peak of 1,609 attained in October 2014 — is up from the year-ago figure of 373.
U.S. Natural Gas Rig Count Rises: Natural gas rig count of 154 was higher than the prior-week figure of 151. The count of rigs exploring the commodity is higher than the prior-year week's tally of 97. Per the latest report, the number of natural gas-directed rigs is 90.4% lower than the all-time high of 1,606 recorded in 2008.
Rig Count by Type: The number of vertical drilling rigs totaled 27 units, in line with the prior-week count. Horizontal/directional rig count (encompassing new drilling technology with the ability to drill and extract gas from dense rock formations, also known as shale formations) of 713 compared favorably with the prior-week level of 706.
Gulf of Mexico (GoM) Rig Count Increases: GoM rig count was 15 units, all oil-directed. The count was higher than the prior-week number of 14 units.
Rig Count in the Most Prolific Basin
Permian — the most prolific basin in the United States — recorded a weekly oil rig tally of 344, in line with the prior week's count. In the Eagle Ford, the tally for weekly oil drilling rigs was 60, higher than the prior-week count of 59.
The West Texas Intermediate crude price is trading higher than the $100-per-barrel mark, reflecting a massive improvement from last year. Higher oil prices will likely pave the way for rig additions despite a slowdown in drilling activities as upstream players mainly focus on stockholder returns rather than boosting output.
Meanwhile, investors may keep a close eye on energy stocks like Whiting Petroleum Corp. and Continental Resources, Inc. The companies are expected to benefit from the current healthy oil price scenario.
Whiting Petroleum is a leading upstream energy company and the top producer of crude oil in North Dakota. With oil prices improving rapidly, Whiting Petroleum is expected to continue generating handsome cash flows while maintaining a healthy balance sheet.
Headquartered in Denver, CO, Whiting Petroleum has witnessed upward earnings estimate revisions for 2022 and 2023 in the past 30 days. Looking at the price chart, WLL has gained 40.2% over the past year, outpacing the 37.9% rise of the composite stocks belonging to the industry. WLL currently carries a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
Continental Resources is also a leading upstream energy company with proven reserves in North Dakota and Oklahoma. The oil inventories of Continental Resources are among the best in the industry.
Headquartered in Oklahoma City, Continental Resources has witnessed upward earnings estimate revisions for 2022 and 2023 in the past 30 days. Considering the price chart, Continental Resources — currently sporting a Zacks Rank #1 — has gained 80.3% in the past year, outpacing the 37.9% rise of the composite stocks belonging to the industry.
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