Why Did PDCE’s Stock Rise after Its 2Q16 Earnings Release?



PDCE’s stock performance

After PDC Energy’s (PDCE) 2Q16 earnings release on August 9, 2016, its stock rose by ~6%. YoY (year-over-year), PDCE has risen by ~13%.

In this part of our series, we’ll analyze PDCE’s stock performance with respect to movements in the broader industry and the broader market.

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Key comparisons

PDCE’s peer Whiting Petroleum (WLL) has seen its stock price fall by ~62% YoY. As the graph above shows, PDC Energy’s performance has been driven mainly by WTI (West Texas Intermediate) crude oil prices (OIL) and natural gas prices (UNG). These have also been driving the broader industry ETF, the Energy Select Sector SPDR ETF (XLE).

PDCE an outperformer

From July 26 to August 9, PDCE’s stock was outperforming the Energy Select Sector SPDR ETF (XLE). Toward the end of the period, it gave higher returns compared to XLE. PDCE’s stock rose by ~13.3% during this period, while XLE rose by just ~1.1%.

PDCE also gave higher returns compared to crude oil and natural gas at the end of the period, and it outperformed the SPDR S&P 500 ETF (SPY), which rose by only 0.7%.

PDCE’s stock rose by ~6% on August 9 despite its worse-than-expected 2Q16 earnings. Its revenue did manage to beat analysts’ consensus estimate, and it was higher both YoY and sequentially, which likely explains the Market’s positive reaction to PDCE’s 2Q16 earnings.

As we can also see in the above graph, PDCE’s stock has been doing extremely well in periods when crude oil prices are rising.

Next, we’ll discuss PDCE’s implied volatility.


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