ConocoPhillips: a bag of surprises?

The world’s largest independent exploration and production (E&P) company, ConocoPhillips, with a market capitalization of 120.737B, is expected to announce its fourth quarter 2021 financial results and business outlook on Thursday 3rd February, 2022 before the market opens.

The report will be for the fiscal quarter ending Dec 2021. In the fiscal third quarter of 2021, which ended on 30th September 2021 and reported on 2nd November 2021, the company’s revenue was 11.57 billion dollars and the net income was 2.38 billion dollars, while the earnings per share stood at 1.77, surpassing analysts’ forecasts of 1.52. These figures were clearly higher than the ones for the same period in 2020 (revenue 4.42 billion dollars; net income of -450 million dollars; earnings per share 0.42). At the moment, according to a Yahoo Finance survey of 20 analysts, the forecasted earnings average estimate is 2.18 per share and average revenue is estimated to come in at 39.9 billion dollars.

Investors will be paying attention to whether ConocoPhillips will increase its capital expenditure in 2022, which was hinted at in the Q3 financial report. The fact that there has been a conflict between the Ukraine and Russia effectively pushed oil prices higher, consequently benefitting upstream oil and gas companies such as ConocoPhillips, whose stock price managed to ride the wave and is up 26.82% y/y, trading at 15.4 times the expected 2021 EPS, 10.7 times the estimated 2022 earnings of $8.49 and 11.9 times the estimated 2023 earnings of $7.63 per share. The company pays an annual dividend of $1.52 (yield of 1.70%). Total shareholder return for the past 12 months was 131.4%.

It is also important to note from the previous reports that the company has a historical record of beating earnings estimates, and according to   Zacks Earnings ESP (Expected Surprise Prediction) it is ranked number 3 among companies with a similarly  consistent history and therefore investors will watch out for a possible surprise exceeding analyst expectations.

Technically, #ConocoPhillips price action on the daily timeframe chart is trending upwards above the 50 (blue), 20 (red) and 200 (black) simple moving average having come off a low at $65.94 after consolidating in a 12-week bull flag chart pattern. The ADX is above $25.00, clearly indicating that the stock price is in a strong uptrend. Currently, the stock price is targeting the first fib expansion at the 50 period MA that is 85.17. A firmer downside target can be anticipated at 79.00 which was a key swing low in January this year.

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Dennis Mwenga

Market analyst & Trainer –  HF Educational Office – Kenya  

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