Will Cabot Oil & Gas (COG) Beat Earnings on Higher Volumes?

We expect Cabot Oil & Gas Corporation COG, an independent oil and gas exploration company, to beat expectations when it reports second-quarter 2014 financial results before the opening bell on Jul 24, 2014.

Why a Likely Positive Surprise?

Our proven model shows that Cabot Oil & Gas is likely to beat earnings because it has the right combination of two key components.
 
Zacks ESP: Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is +8.00%. This is very meaningful and a leading indicator of a likely positive earnings surprise for shares.

Zacks Rank: Cabot Oil & Gas carries a Zacks Rank #3 (Hold). Note that stocks with a Zacks Rank #1, 2 and 3 have a significantly higher chance of beating earnings. The Sell-rated stocks (#4 and 5) should never be considered going into an earnings announcement.  
 
The combination of Cabot Oil & Gas' Zacks Rank #3 and ESP of +8.00% makes us confident of an earnings beat in the coming week.

What is Driving the Better-Than-Expected Earnings?

Cabot Oil & Gas has a strong portfolio of assets in the high-return Marcellus and Eagle Ford Shale plays that leads to production growth for the company. The first-quarter earnings results recorded 34% production growth. Further, during its first-quarter conference call, the company had anticipated sequential growth. The several wells that came online in the past quarter should also aid this growth.

Cabot Oil & Gas reports good results from its Eagle Ford oil acreage. This should be reflected in the upcoming results, as oil prices have rallied and remained above the $100 per barrel threshold.

Additionally, Cabot Oil & Gas has been working on its efficiency as well. The company reported lower year-over-year unit costs during the first quarter. If this trend continues, margins are set to improve, aiding results.  

Though the company failed to meet estimates in the first quarter, it has a trailing four-quarter average positive surprise of 12.80%.

Other Stocks to Consider

Cabot Oil & Gas is not the only stock looking up this earnings season. We also see likely earnings beats coming from these three companies in the same sector:

Callon Petroleum Company CPE has Earnings ESP of +7.14% and a Zacks Rank #1 (Strong Buy).

Mid-Con Energy Partners, LP MCEP has Earnings ESP of +8.89% and a Zacks Rank #1.

RSP Permian, Inc. RSPP has Earnings ESP of +3.70% and a Zacks Rank #1.
 

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CABOT OIL & GAS COG: Free Stock Analysis Report
 
CALLON PETE-DEL CPE: Free Stock Analysis Report
 
RSP PERMIAN INC RSPP: Free Stock Analysis Report
 
MID-CON ENERGY MCEP: Free Stock Analysis Report
 
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