5 Energy Stocks To Power Your Portfolio This Earnings Season

The Q1 earnings season is picking pace with 30.8% of the S&P 500 companies having reported results, as of Apr 25. A total of 154 players belonging to the index recorded year-over-year earnings growth of 25.4% on 10.3% higher revenues.

This earnings season will likely see strong performances from the Energy sector. Around 16.7% of the S&P 500 energy players have reported results, as of Apr 25. These firms have seen year-over-year earnings growth of 190.9%, with 60% of the companies surpassing the Zacks Consensus Estimate.  

Q1 Oil Price Performance Impressive

Per the U.S. Energy Information Administration, the average monthly price of West Texas Intermediate (WTI) crude for the month of January, February and March was recorded at $63.70 per barrel, $62.23 per barrel and $62.73 per barrel, respectively.

Notably, the commodity never crossed the $60 psychological mark in the 2015-2017 period. The production cut extension agreement by the OPEC players through 2018-end primarily supported the rally in crude.

Energy Sector to Flourish

For first-quarter 2018, we expect Energy to see year-over-year earnings growth of 61.2% on 15.5% revenue growth. Among the 16 Zacks sectors, Energy will likely outshine others, with Construction expected to be next with 43.4% earnings growth.

Energy is expected to be the key driver for S&P 500’s year-over-year earnings growth. Excluding Energy, the index’s first-quarter earnings growth is anticipated to drop to 18.6% from 20%. In terms of total profit, we expect Energy to earn $14.3 billion through the January-to-March quarter of 2018, significantly higher than each of the last four quarters.

The crude rally primarily supported the sector as profits of Energy companies largely depend on the commodity’s price.

How to Pick the Right Energy Stocks?

With a wide array of companies in the Energy sector muddling up the stock picking power, the Zacks methodology could offer some relief. One can narrow down the list using positive Zacks Earnings ESP as a guide, along with a favorable Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold).

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