The Zacks Analyst Blog Highlights:PeabodyEnergy, CONSOL Energy, Otter Tail,
Wisconsin Energy and ExxonMobil
CHICAGO, Jan. 28, 2013
CHICAGO, Jan. 28, 2013 /PRNewswire/ --Zacks.com announces the list of stocks
featured in the Analyst Blog. Every day the Zacks Equity Research analysts
discuss the latest news and events impacting stocks and the financial markets.
Stocks recently featured in the blog include Peabody Energy (NYSE:BTU), CONSOL
Energy Inc. (NYSE:CNX), Otter Tail Corporation (Nasdaq:OTTR), Wisconsin Energy
Corp. (NYSE:WEC) and ExxonMobil Corporation (NYSE:XOM).
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from the Pros newsletter: http://at.zacks.com/?id=5513
Here are highlights from Friday's Analyst Blog:
Peabody Likely to Miss
PeabodyEnergy (NYSE:BTU) will release its fourth quarter 2012 financial
results before the market bell on Jan 29, 2013. In the prior quarter, this
coal operator reported a 50.00% earnings surprise. Peabody currently has a
Zacks Rank #5 (Strong Sell). Let's see how things are shaping up at Peabody
prior to this announcement.
Factors to Consider This Quarter
2012 was overall a dull year for the coal industry as coal companies continued
to face the brunt of a mild winter, rising competition from natural gas
producers, increasing usage of alternate energy for electricity generation and
compliance with increasing government regulation making their operations
Peabody's underground Willow Lake Mine in Southern Illinois met with an
accident in Nov 12, and the company decided to permanently idle the mine as it
failed to comply with acceptable security standards. This closure will result
in a charge of 10 cents to 15 cents (after tax) in the fourth quarter.
The company tried to sharpen its competitive edge and strengthen its global
operation by making changes to the top management in both American and
Australian business units.
Accordingly, our proven model does not conclusively show that Peabody Energy
is likely to beat earnings this quarter. That is because a stock needs to have
both a positive earnings Expected Surprise Prediction (ESP) (Read: Zacks
Earnings ESP: A Better Method) and a Zacks Rank of #1, 2 or 3 for this to
happen. This is not the case here.
Positive Zacks ESP: This is because the Most Accurate estimate stands at 28
cents while the Zacks Consensus Estimate is lower at 26 cents, resulting in
Zacks Rank #5 (Strong Sell): Peabody's Zacks Rank #5 complicates the
forecasting power of ESP making surprise prediction difficult. Even though
Peabody registered earnings surprise in the last four quarters, we caution
investors against the stock going into the earnings announcement, especially
with the company observing negative estimate revisions momentum.
Other Stocks to Consider
Here are some other companies which are linked with the coal industry you may
want to consider on the basis of our model which shows that they have the
right combination of elements to post an earnings beat this quarter:
CONSOL Energy Inc. (NYSE:CNX) has earnings ESP of +18.18% and carries a Zacks
Rank #3 (Hold).
Otter Tail Corporation (Nasdaq:OTTR) has earnings ESP of +6.67% and carries a
Zacks Rank #3 (Hold).
Wisconsin Energy Corp. (NYSE:WEC) has earnings ESP of +2.38% and carries a
Zacks Rank #1 (Strong Buy).
Exxon Strikes Oil in Colombia
U.S. energy major ExxonMobil Corporation (NYSE:XOM) has encountered oil in
exploration well Mono Arana 1, in the Middle Magdalena Valley of Colombia on
the VMM2 block.
The Mono Arana 1 well was drilled to evaluate the hydrocarbon potential of a
shallow conventional Tertiary Lisama sandstone reservoir and deeper shale and
carbonate reservoirs in La Luna and Tablazo oil source rocks. The well was
spud on Sep 23, to a depth of 9,942 feet in the Cretaceous La Luna structure.
ExxonMobil owns a 70.1% stake in the VMM2 block, while partners Canacol Energy
Ltd. And and Vetra Exploracion y Produccion Colombia hold a 20% and 9.9%
The drilling of the La Luna section shows encouraging results as around 760
feet of the section witnessed superior hydrocarbon deposits throughout the
entire interval. The associate partners plan to test results from the La Luna
later this year, after ExxonMobil takes over the operatorship of the Mono
Arana 1 well.
Penetrating at roughly 4800 feet deep in the Lisama formation, the results
show that it holds around 85 feet of potential net oil pay with an average
porosity of 21% in three main zones. The company stated that two intervals
flowed at a combined average gross rate of 1,242 barrels of oil per day during
a short-term test in the tertiary Lisama sandstone.
The associated partners in the venture expect to evaluate and bring into
commercial production the Lisama oil discovery in 2014. Further appraisal of
the La Luna structure is also designed for the second quarter as it
encountered high pressure while drilling the operation.
Although we remain skeptical due to ExxonMobil's continued disappointing
production trend, we expect major capital projects and upstream ventures to
drive 2013 production volume. Additionally, the start-ups of Kearl and
Kashagan and the production ramp up from 2012 start-ups in Angola and Nigeria
are also added incentives.
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