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How Has ConocoPhillips’ Stock Performed in 1Q16?

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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.

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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.

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