Cimarex Energy (XEC) Down 16.6% Since Earnings Report: Can It Rebound?

A month has gone by since the last earnings report for Cimarex Energy Co XEC. Shares have lost about 16.6% in that time frame, underperforming the market.

Will the recent negative trend continue leading up to the stock's next earnings release, or is it due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.

Cimarex Energy Beats Q1 Earnings, Revenue Estimates

Cimarex Energy Co. reported first-quarter 2017 earnings of $1.05 per share beat the Zacks Consensus Estimate of $0.85. In the January–March quarter of 2016, the company had incurred a loss of $0.40 per share. The improvement is mainly attributable to increase in production and higher oil and gas price realizations.

Total Revenue

In the first quarter, Cimarex Energy's total revenue of $447.2 million surpassed the Zacks Consensus Estimate of $428 million. Revenues also increased from $240.6 million a year ago.

Operational Highlights

In the quarter under review, total production averaged 1,063 million cubic feet equivalent (MMcfe) per day, up 9% year over year. Oil volumes increased 15% to 52.2 thousand barrels per day (MBbls/d) and natural gas volumes inched up 3% to 487.2 MMcf, both on a year-over-year basis. Natural gas liquids NGL volumes jumped 17.7% year over year to 43.8 MBbls/d.

Realized prices for natural gas, crude oil and NGL displayed year-over-year increase of 57%, 70%, and 107% to $3.01 per thousand cubic feet, $47.71 per barrel and $20.40 per barrel, respectively, in the reported quarter.  

The company brought 70 gross (26 net) wells onstream during the quarter. The company added that a total of 82 gross (26 net) wells were pending completion as of Mar 31, 2017.

Financial Condition

As of Mar 31, 2017, Cimarex Energy had cash and cash equivalents of $578.9 million compared with $652.9 million as of Dec 31, 2016. Net long-term debt was $1.5 billion as of Mar 31, 2017, which represents a debt-to-capitalization ratio of 40.2%.   

Cimarex Energy's net cash from operating activities during the quarter was $249.5 million compared with $85.4 million in the prior-year period. The company spent $306 million for exploration and development during the first three months of this year. This was primarily funded with cash flow from operations and cash in hand.

Guidance

Total production for the second quarter of 2017 is projected to average 1.08–1.13 Bcfe per day.

Full-year 2017 production is now estimated at the range of 1.09–1.13 Bcfe per day, up 15% from the midpoint of the 2016 level.

Capital investment for exploration and development has been reiterated at $1.1–$1.2 billion for 2017.

How Have Estimates Been Moving Since Then?

It turns out, fresh estimates have trended upward during the past month. There have been 11 revisions higher for the current quarter compared to three lower.

Cimarex Energy Co Price and Consensus

Cimarex Energy Co Price and Consensus | Cimarex Energy Co Quote

VGM Scores

At this time, the stock has a strong Growth Score of 'A', a grade with the same score on the momentum front. However, the stock was allocated a grade of 'C' on the value side, putting it in the middle 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of 'A'. If you aren't focused on one strategy, this score is the one you should be interested in.

Based on our scores, the stock is more suitable for growth and momentum investors than value investors.

Outlook

Estimates have been trending upward for the stock. The magnitude of these revisions also looks promising. Interestingly, the stock has a Zacks Rank #3 (Hold). We are expecting an inline return from the stock in the next few months.