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Chicago, IL – April 28, 2022 – Zacks Market Edge is a weekly podcast hosted by Zacks equity strategist Tracey Ryniec. Each week, Tracey will be joined by guests to discuss the hottest investing topics in stocks, bonds and ETFs and how they impact your life. To listen to the podcast, click here: https://www.zacks.com/stock/news/1909520/here-come-the-blockbuster-energy-earnings
Here comes the energy benefits to success
Welcome to episode 312 of the Zacks Market Edge podcast.
- (0:45) – What are the current trends for this earnings season?
- (5:15) – Have stock analysts been too conservative with estimates?
- (11:20) – Will the banks race with higher interest rates?
- (17:05) – Breaking down the solid benefits of energy
- (22:35) – Episode recap: WTFC, PNC, JPM, PXD, OXY, CVX, XOM
- [email protected]
Each week, Zacks host and equity strategist Tracey Ryniec will be joined by guests to discuss the hottest investing topics in stocks, bonds and ETFs and how they impact your life.
This week, she’s joined by Zacks chief research officer Sheraz Mian to discuss earnings trends for the first quarter earnings season.
Earnings reports so far haven’t been as “bad” as the street expected. Many companies are reporting inflationary pressures, but they are also still able to raise prices and consumer demand has been strong.
What about finances?
Banks have been in the spotlight as the Federal Reserve is poised to continue raising interest rates. Rising rates normally give a boost to bank income.
Investors should look to regional and community banks for the biggest profit boost. For example, 6 estimates are higher for Chicago Wintrust Financial (WTFC) last week.
Wintrust’s Zacks 2022 consensus estimate fell from $6.89 to $7.54 during this time.
Shares of Wintrust are down 2.7% year-to-date. Its valuation is attractive, with a forward PER of 12.3 and a dividend of 1.5%.
What about energy?
Energy was the best performing sector in 2021 and remains the champion in 2022.
It is also one of the few industries to have positive earnings estimate revisions. The others include construction, automotive and medical.
Profits for the sector are expected to rise in the first quarter to $34.7 billion from $11.1 billion a year ago.
Large Cap Energy Stocks with Significant Earnings Revisions
1. Pioneer natural resources (PXD)
Pioneer Natural Resources is one of the large independent oil and gas companies drilling in the Permian Basin.
Analysts are optimistic about 2022. 4 estimates are higher with only 1 lower last week for the full year. The 2022 Zacks consensus estimate has risen from $22.11 to $31.01 in the past 3 months.
Pioneer Natural Resources earned just $13.26 last year, representing earnings growth of 133.9%.
It is scheduled to release its results on May 4.
Are analysts still too conservative on Pioneer’s earnings?
2. Western Oil (OXY)
Occidental Petroleum also saw its full-year earnings estimates revised higher last week.
3 estimates are higher and 1 was cut during this time. But it pushed the Zacks consensus estimate up to $9.20 from $3.56 over the past 90 days.
That’s an expected profit growth of 261%, as Occidental Petroleum earned just $2.55 last year.
Occidental Petroleum publishes its results on May 10. This is a Zacks #1 ranking (Strong Buy).
3. Herringbone (CLC)
Chevron also has rising earnings estimates. 2 were lifted and 1 cut, last week.
That pushed annual revenue up to $16.83 from $10.47 over the past 90 days.
That’s 107% earnings growth, as Chevron earned just $8.13 last year.
Shares of Chevron are trading at just 9.4x even though they have gained 33% since the start of the year.
Chevron, a Zacks #2 (Buy) stock, reports earnings on April 29.
4. ExxonMobil (XOM)
ExxonMobil also reports earnings on April 29, along with Chevron. Analysts made the same revisions to its estimates, with 2 higher and only 1 lowered last week.
This pushed the Zacks consensus up to $9.84 from $6.48. That’s an 82% profit growth from 2021, when profit was just $5.38.
ExxonMobil is up 35% year-to-date, but still trades with a forward P/E of just 8.4.
Are analysts still too cautious on ExxonMobil in 2022?
What else do you need to know about Q1 earnings season?
Tune into this week’s podcast to find out.
[In full disclosure, Tracey owns shares of PXD in her personal portfolio.]
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