It was another volatile week for the E&Ps this week as sector performance got off to a good start, faded towards the middle, and then rallied back on Friday to finish +6.9% for the week vs. the S&P500 +1.0% and WTI -2.8%. Performance between the sub groups continues to be split, with the rally in gas names continuing for a second week.
Search Coverage List, Models & Reports
Search Results1-10 out of 165
While the E&Ps have strongly bounced back over the past two weeks, in part due to the market shift towards Value over Growth and Momentum, the sector is still -34% YTD vs. the S&P500 and increasingly has the feeling of being left for dead. Whether due to fear over oil prices heading below $50/bbl on weakening demand/plentiful supply, the rise of renewables, Energy shrinking to <5% of the S&P500 pie, or historical sector value destruction, we see the market’s perception of the E&Ps more about concern than opportunity. There’s still plenty for the E&Ps to prove, but with the sector pricing in $45/bbl WTI and trading at the widest margin (6.5x) to the S&P500 on NTM EV/EBITDA going back to 2001, we see good value in the E&Ps and believe this short rally could wake up the market to an improving outlook.
Inside this week we have two features, the first is we look at the S&P 500 Energy Index vs. the ISM Index as it broke 50 this week. FYI, Energy was the best performing sector this week. Second, we sat down with HES this week for a catch up, with notes inside.
It’s back to the grind this week and in preparation for the upcoming conference season, inside this weekend we provide a list of sector and company level questions across our coverage universe. We touch on the key issues around growth rates, return of capital, M&A, and asset specific questions/catalysts that can drive sector and stock performance through the rest of the year.
Thanks to all the companies and clients that participated in our Denver E&P Summit. We hope to have more to smile about next year, as the sector swoons continued this past week with our E&P Index -3% vs. the S&P500 -1% and WTI +1. Inside this week, we provide some additional takeaways from Denver and discuss the mystery chart below, as it’s very telling of what investors think of the Energy sector.
We’re providing quick snapshots and commentary as we update estimates post 2Q results across our coverage group.
We’re glad to be on the backside of earnings. Lots to discuss with our E&P Index -6.1% after this brutal week vs. the S&P500 -0.5% and WTI -2.4%. Over the three-week 2Q earnings period, our E&P Index fell 20%...not quite the outlook we were expecting heading into these updates. Additionally, this weekend we’re also highlighting the August DEPTH model, with the quant dashboard now up and running. It’s very user friendly and it shows you how a stock’s quant ranking has changed over the past two years and what factors are most important going into the current ranking. Last, with Premier League action starting up this weekend, we show the odds for each team, with Man City and Liverpool the clear favorites.
After five years of asset transformation, WPX is now hitting the key inflection point to drive oil volume growth alongside positive FCF generation. Further, with operations still improving and inventory deep, the newly announced share repurchase program should also send a positive message that WPX can be opportunistic with the sector out of favor and is uniquely positioned amongst the SMID Cap producers. We like the update and remain Outperform.
This week we take or cues from Friday’s EOG conference call (8/2/19) as they 1) discussed there are multiple scenarios being devised for 2020 and 2) continue to view the profile as competitive vs. the S&P500. We look at both inside, outlining three different growth scenarios over the 2019-21 period at $45/$55/$65 WTI pricing and showing how the current multi-year outlook compares the S&P500 on FCF Yield, Dividend Yield, ROCE, EV/EBITDA, and Revenue Growth. Additionally, with EOG’s stock performance essentially mimicking sector sentiment over the past year (hitting an all-time high in Sept 2018 vs. a 1-year low this week), we broke down EOG’s investor based into five categories (Generalist, Growth, Value, Index, Hedge Fund) and looked at how the investor base has changed over the past five years.
Rough week for the E&Ps again, largely as a result of WTI’s 7% decline. For the week our E&P Index was -8% vs. the S&P500, bringing the YTD underperformance vs. the market to 27%.
- 1 of 17
- next →