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Is Energen’s Rally Justified after Its 1Q16 Earnings Release?

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Is Energen’s Rally Justified after Its 1Q16 Earnings Release? PART 1 OF 4

Analyzing Energen’s 1Q16 Earnings Performance

Energen’s 1Q16 earnings beat estimates

Energen (EGN) announced its 1Q16 earnings on May 5, 2016, after the Market closed. EGN reported adjusted earnings per share of -$0.64, $0.03 better than Wall Street analysts’ consensus for earnings per share of -$0.67.

Energen’s 1Q16 earnings are lower by $0.69 per share when compared with its 1Q15 profit of $0.05 per share. Even when compared sequentially with 4Q15, Energen’s 1Q16 earnings are lower by $0.91 per share.

Analyzing Energen&#8217;s 1Q16 Earnings Performance

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Energen’s 1Q16 revenues beat estimates

For 1Q16, Energen reported adjusted revenues of ~$128 million, ~2% better than analysts’ consensus for revenues of ~$126 million. Energen’s 1Q16 revenues are lower by ~54% when compared with 1Q15 revenues of ~$282 million. However, when compared sequentially with 4Q15, EGN’s 1Q16 revenues are higher by ~57%.

Energen’s earnings trend

As seen in the above chart, Energen reported lower earnings in 2015 due to lower realized crude oil (USO) (UWTI) (DWTI) and natural gas (UNG) (BOIL) prices. In 1Q16, EGN saw its adjusted earnings turn negative for the first time since 2013. Since 1Q13, Energen has beaten the earnings expectations ~38% of the time.

Due to the steep downward trend in energy prices, upstream companies QEP Resources (QEP) and Stone Energy (SGY) have reported respective ~39% and ~47% year-over-year declines in their 1Q16 revenues.

EV Energy Partners (EVEP) reported an ~32% year-over-year decline in its 4Q15 revenues. EVEP is set to report its 1Q16 earnings this week.

Antero Resources (AR) reported an ~17% year-over-year increase in its 1Q16 adjusted revenues. The SPDR S&P Oil and Gas Exploration & Production ETF (XOP) generally invests at least 80% of its total assets in oil and gas exploration companies. The Energy Select Sector SPDR ETF (XLE) typically invests at least 95% of its total assets in oil and gas companies.

In this series

Having analyzed Energen’s 1Q16 earnings performance, we will also look at EGN’s operational performance, Wall Street analysts’ ratings, and how Energen’s stock price reacted to past earnings beats.

Next, let’s take a look at EGN’s operational performance for 1Q16.

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