4 Oil Stocks That Continue To Crush Earnings Estimates

Arguably, corporate earnings are the most keenly watched events by investors. Earnings theoretically determine the growth or contraction of companies as well as their stocks. In fact, bulk of the research on Wall Street is centered on whether earnings numbers really drive share prices. While companies may try every trick in the book to impress its investors, what ultimately catches their eye is the earnings performance compared to market expectations.

Q1 Earnings Season Winding Down

The first-quarter earnings season is almost over with just around 10% of the S&P 500 members left to report their results. We now have Q1 results from 446 S&P 500 members that combined account for 91.9% of the index’s total market capitalization. According to our latest Earnings Outlook report, total earnings for these companies are up 14% from the same period last year on 7.9% higher revenues, with 72.4% delivering positive earnings surprises and 66.4% beating revenue estimates.

Energy Earnings Soar

The ‘Energy’ sector – whose year-earlier comparison was to an aggregate loss – stood out as one of the best performers of the Q1 earnings season. With all sector components on the S&P 500 index having reported results, total earnings had very strong year-over-year dollar growth on 33.8% higher revenues. While 69.7% of the companies have been successful in beating earnings estimates, 63.6% of them have outperformed the topline.

Concerns Remain Despite Optimism

Despite hope offered by the biggest oil deal in a decade and a new pro-fossil fuel administration in the White House, crude prices have been on a freefall over the past few weeks, erasing all the gains associated with the OPEC-led output cut. The continued rise in domestic production thanks to soaring shale output have dragged down the commodity below the psychologically-critical $50 threshold. In other words, while OPEC's moves to trim output and rebalance the demand-supply situation has stabilized the market to a large extent, in the process it has incentivized shale drillers to churn out more.

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