Can Energen’s Stock Price Continue Its Post-1Q16 Earnings Rally?



Energen’s stock price action

Energen (EGN) announced its 1Q16 earnings on May 5, 2016, after the Market closed. Following its earnings release, a contrarian reaction occurred in which better-than-expected earnings pushed Energen’s stock price down by ~4% in two sessions.

In the last two months leading into the earnings, Energen’s stock price has already increased by a whopping ~70%, mainly due to the ~56% bounce in crude oil (USO) (SCO) (DWTI) prices during the same period.

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Energen’s stock price trend change

Falling crude oil (UCO) and natural gas (UGAZ) prices over the last two years have led to a falling trend in the entire upstream sector, and Energen was no exception.

As you can see in the above graph, Energen’s stock has been in a new uptrend since February 2016. EGN is clearly making a pattern of higher highs and higher lows.

Energen’s 2016 relative performance

Energen (EGN) has been underperforming other upstream companies in 2016. During the year, Energen’s stock price has been down by ~5%.

Among the other oil and gas producers, Parsley Energy (PE), Laredo Petroleum (LPI), and Range Resources (RRC) are up by ~30%, ~42%, and ~70%, respectively. The Energy Select Sector SPDR ETF (XLE) generally invests at least 95% of its total assets in oil- and gas-related equities from the S&P 500.

Energen’s stock price behavior after past earnings beats

In the last year, there were two occasions—the 3Q15 and 4Q14 earnings—in which Energen (EGN) beat the earnings expectations.

EGN reported its 3Q15 earnings after the Market closed on November 5, 2015. In 3Q15, excluding the one-time items, EGN reported a profit of $0.36 per share. This was $0.09 better than the consensus for its profit of $0.27 per share. Following the 3Q15 earnings release, better-than-expected earnings saw Energen’s stock price decrease by ~5% in five sessions.

Similar contrarian reactions were also observed after 4Q14 earnings when Energen’s stock price decreased by ~9% in four weeks, even after beating the consensus earnings estimates by $0.02 per share.


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