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SilverBow (SBOW) to Report Q3 Earnings: What Lies Ahead?

SilverBow Resources, Inc. SBOW is set to release third-quarter results after the closing bell on Nov 3. The current Zacks Consensus Estimate for the to-be-reported quarter is a profit of $2.07 per share on revenues of $79 million.

Let’s delve into the factors that might have influenced the independent natural gas producer’s performance in the September quarter. But it’s worth taking a look at SilverBow Resources’ previous-quarter performance first.

Highlights of Q2 Earnings & Surprise History

In the last-reported quarter, the Houston, TX-based upstream player beat the consensus mark on higher-realized prices. SilverBow had reported adjusted earnings per share of $1.28 that went past the Zacks Consensus Estimate of $1.25. The company’s quarterly revenues of $69.9 million also outperformed the Zacks Consensus Estimate by 10.9%.

SilverBow beat the Zacks Consensus Estimate twice in the last four quarters and missed in the other two, ending up with a negative earnings surprise of 51.68%, on average. This is depicted in the graph below:
 

SilverBow Resources Price and EPS Surprise

SilverBow Resources price-eps-surprise | SilverBow Resources Quote

 

Trend in Estimate Revision

The Zacks Consensus Estimate for the third-quarter bottom line remained the same in the last seven days. The estimated figure indicates a 456.9% surge year over year. The Zacks Consensus Estimate for revenues, meanwhile, suggests a 72.87% increase from the year-ago period.

Factors to Consider

According to the U.S. Energy Information Administration, in Q3 of 2020, U.S. Henry Hub average natural gas prices were $1.77 per MMBtu in July and rose to $2.30 in August before tumbling to $1.92 in September. Coming to 2021, the fuel was trading at $3,84, $4.07 and $5.16 per MMBtu, in July, August and September, respectively. In other words, natural gas traded noticeably higher in all the three months.

This price boost is likely to have buoyed up the third-quarter results of SilverBow Resources, around 80% of whose total output comprises natural gas.

But on a somewhat bearish note, the company is likely to have faced a sequential decline in production due to a constrained capital budget. To be precise, the midpoint of management's third-quarter production guidance equates to 207.5 cubic feet equivalent per day (MMcfe/d), indicating a 2.6% drop from the previous quarter’s 213 Mmcfe/d. This might have impacted SilverBow’s results in the September quarter.

What Does Our Model Say?

The proven Zacks model does not conclusively show that SilverBow Resources is likely to beat estimates in the third quarter. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of beating estimates. But that’s not the case here.

You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Earnings ESP: SilverBow Resources has an Earnings ESP of 0.00%. This is because the Most Accurate Estimate and the Zacks Consensus Estimate are pegged at $2.07 per share each.

Zacks Rank: SilverBow Resources currently carries a Zacks Rank #1, which increases the predictive power of ESP. However, the company’s 0.00% ESP makes surprise prediction difficult this earnings season.

You can see the complete list of today’s Zacks #1 Rank stocks here.

Stocks to Consider

While an earnings beat looks uncertain for SilverBow Resources, here are some firms from the energy space that you may want to consider on the basis of our model:

Continental Resources CLR has an Earnings ESP of +3.81% and a Zacks Rank #1. The firm is scheduled to release earnings on Nov 3.

Comstock Resources CRK has an Earnings ESP of +2.53% and is Zacks #1 Ranked. The firm is scheduled to release earnings on Nov 2.

APA Corporation APA has an Earnings ESP of +0.45% and a Zacks Rank #1. The firm is scheduled to release earnings on Nov 3.


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