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Can WPX Energy Stock Keep Rallying after Its 1Q16 Earnings?

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WPX Energy stock on the day of its 1Q16 earnings

WPX Energy (WPX) announced its 1Q16 earnings on May 4, 2016, after the Market closed. Following the earnings, there was a contrarian reaction. Lower-than-expected earnings saw WPX Energy stock rise 6.8% the next day.

It must be noted that in last three months leading up to the earnings, WPX Energy stock rose a whopping 153%. This was mainly due to the ~58% bounce in crude oil (USO) (SCO) (UWTI) prices during the same period.

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WPX Energy’s stock price trend

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. WPX was no exception. But since January 2016, as you can see in the above graph, WPX Energy stock is in a new uptrend. It’s clearly making a pattern of higher highs and higher lows.

WPX’s 2016 relative performance

For 2016, WPX is outperforming other upstream companies. Its stock has risen ~57%. Other oil and gas producers such as Parsley Energy (PE) and Laredo Petroleum (LPI) rose ~29% and ~58%, respectively. Bonanza Creek Energy (BCEI) has fallen ~33% year-to-date.

WPX’s stock price movement after past earnings miss

In the last one year, there were three occasions—4Q15, 3Q15, and 2Q15—that WPX missed the earnings expectations. WPX reported its 4Q15 earnings after the Market closed on February 24, 2016. Excluding the one-time items, it reported a loss of $0.24 per share, which was $0.05 lower than the consensus of a loss of $0.19 per share. Following the earnings release, lower-than-expected earnings saw WPX stock rise ~53% in eight sessions.

A similar contrarian reaction was also observed after 3Q15 and 2Q15 earnings. WPX stock rose ~17% and ~21% in two sessions and five sessions, respectively, even after missing consensus earnings estimates by $0.04 and $0.01 per share, respectively.

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