ConocoPhillips’ stock price action
Declining crude oil (USO) (UWTI) (DWTI) and natural gas (UNG) (UGAZ) (DGAZ) prices over the last two years are dragging the entire upstream sector into a downtrend. But this month, as seen in the below chart, ConocoPhillips’ (COP) stock price made a higher low for the first time in almost six months.
COP’s stock price performance before 1Q16 earnings
Recently, COP has shown excellent relative strength when compared with other upstream companies. In the last two months, COP’s stock price has increased by ~52%. In comparison, the SPDR S&P Oil and Gas Exploration & Production ETF (XOP) is up by ~47% for the same period. XOP generally invests at least 80% of its total assets in oil and gas exploration companies. The ETF ISE-Reverse Nat Gas Index Fund (FCG) is up ~42% in the same period.
For 2016, COP has been underperforming bigger upstream companies from the S&P 500 (SPY). COP is up by ~2%, whereas Occidental Petroleum (OXY), Noble Energy (NBL), and EOG Resources (EOG) are up by ~12%, ~6%, and ~13%, respectively.
COP’s stock price behavior after past earnings
COP reported its 4Q15 earnings before the market opened on February 4, 2016. In 4Q15, excluding the one-time items, COP reported a loss of $0.90 per share, $0.25 worse than the consensus for the loss of $0.65 per share. Following the earnings release, worse-than-expected earnings resulted in a ~15% fall in COP’s stock price in just two sessions.
A contrarian reaction was observed after 2Q15 and 1Q15 earnings, when COP’s stock price decreased by ~7% and ~4% in five sessions and eight sessions, even after beating the consensus earnings estimates.