Factors To Know Ahead Of Talos Energy's (TALO) Q4 Earnings

By Zacks Investment ResearchStock MarketsMar 05, 2020 10:53PM ET

www.investing.com/analysis/factors-to-know-ahead-of-talos-energys-talo-q4-earnings-200514135

Factors To Know Ahead Of Talos Energy's (TALO) Q4 Earnings

By Zacks Investment Research | Mar 05, 2020 10:53PM ET

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Talos Energy Inc. (NYSE:TALO) is slated to report fourth-quarter 2019 results on Mar 11, 2020, after the opening bell.

In the last reported quarter, the company’s earnings of 81 cents per share beat the Zacks Consensus Estimate of 64 cents, courtesy of higher oil production. Notably, this Houston, TX-based company enjoys a firm footing as far as earnings surprises are concerned. Its earnings beat the Zacks Consensus Estimate in the last four quarters, the average positive surprise being 142.5%. This is depicted in the graph below:

Stone Energy Corporation Price and EPS Surprise

Stone Energy Corporation Price and EPS Surprise

Stone Energy Corporation price-eps-surprise | Stone Energy Corporation Quote

Let’s see how things have shaped up prior to the announcement.

Trend in Estimate Revision

The Zacks Consensus Estimate for fourth-quarter earnings of 48 cents has seen no upward but two downward revisions in the past 30 days. The figure suggests a year-over-year decline of 47.3%.

Further, the Zacks Consensus Estimate for revenues is pegged at $244.1 million for the quarter, indicating a fall of 5.6% from the year-ago quarter’s reported figure.

Factors to Consider

Through the December quarter of 2019, the price of West Texas Intermediate averaged $56.96 per barrel, lower than the year-ago quarter’s level of $59.08. Moreover, natural gas prices were also significantly lower in the quarter than fourth-quarter 2018 levels, owing to continued pressure from excess supply and declining demand growth. The drop in commodity prices is likely to have weighed on Talos Energy’s fourth-quarter 2019 profit from operations.

However, the Zacks Consensus Estimate for average oil production volumes is pegged at 42.6 thousand barrels per day (MBbl/d), indicating a rise from 38.9 MBbl/d in the prior-year quarter. Also, the consensus mark for average net overall production is pegged at 55 thousand barrels of oil equivalent per day (MBoe/d), indicating an increase from the year-ago level of 53.4 MBoe/d.

Hence, lower commodity price realization is expected to have led to declining profit levels for the company in the fourth quarter of 2019. However, rising production volumes might have partially offset these negatives.

Earnings Whispers

Our proven model does not conclusively predict an earnings beat for Talos Energy this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that is not the case here as you will see below.

Earnings ESP: Earnings ESP represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate. Talos Energy has an Earnings ESP of -12.50% as the Most Accurate Estimate stands at 42 cents, while the Zacks Consensus Estimate is pegged at 48 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Talos Energy currently carries a Zacks Rank #5 (Strong Sell).

Stocks to Consider

While earnings beat looks uncertain for Talos Energy, here are some companies you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat in their upcoming quarterly results.

Abeona Therapeutics Inc. (NASDAQ:ABEO) has an Earnings ESP of +20.00% and is a Zacks #3 Ranked player. The company is set to release quarterly earnings on Mar 16. You can see the complete list of today’s Zacks #1 Rank stocks here.

Alector, Inc. (NASDAQ:ALEC) has an Earnings ESP of +2.83% and a Zacks Rank #3. The company is set to release quarterly earnings on Mar 24.

Aptose Biosciences Inc. (NASDAQ:APTO) has an Earnings ESP of +23.25% and a Zacks Rank #3. The company is scheduled to release quarterly earnings on Mar 10.

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Factors To Know Ahead Of Talos Energy's (TALO) Q4 Earnings

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