Analyzing Consol Energy’s Stock Movement ahead of Its 1Q16 Earnings

Declining crude oil and natural gas prices during the past two years have been dragging the entire upstream sector into a downtrend. But in February 2016, as seen in below chart, Consol Energy’s (CNX) stock price is reaching higher highs and maintaining higher lows for the first time in almost two years.

Recently, CNX has shown excellent relative strength when compared with other natural gas producers. In the past three months, SWN’s stock price has increased by ~160%. By comparison, the ISE-Reverse Nat Gas Index Fund (FCG) rose by ~42% during same period.

So far in 2016, CNX has been outperforming bigger upstream companies in the S&P 500 (SPY). CNX has risen by ~64%, whereas bigger oil and gas producers like Occidental Petroleum (OXY), Murphy Oil (MUR), and EOG Resources (EOG) have increased by ~10%, ~32%, and ~10%, respectively.

CNX reported its 4Q15 earnings before the market opened on January 29, 2016. In 4Q15, excluding the one-time items, CNX had a $0.11 loss per share, which was $0.02 better than estimates of $0.09 loss per share. Following this earnings release, better-than-expected earnings saw CNX’s stock price increase by ~35% in just six sessions.

In 3Q15, CNX reported a loss per share of $0.28, which was $0.25 worse than estimates of $0.03 loss per share. Following this earnings release, worse-than-expected earnings saw CNX’s stock price decline by ~25% in just four sessions.

A downward reaction was observed after 2Q15 earnings as well. CNX’s stock price decreased by ~32% in about four weeks after missing the consensus earnings estimates by $0.37 per share. Still, CNX’s 1Q15 and 4Q14 post-earnings reactions were decidedly positive, mainly due to the better-than-expected earnings results.