Here's Why It Is Worth Investing In Newfield (NFX) Stock Now
Zacks Investment Research | Jan 24, 2018 01:08AM ET
On Jan 24, Newfield Exploration Company (NYSE:NFX) was raised to a Zacks Rank #1 (Strong Buy).
Why the Upgrade?
Earnings estimate revisions are at the core of the Zacks investment philosophy. Stocks that have recently seen upward revision in estimates tend to outperform the market over the next nine to 12 months.
Over the last 60 days, the Zacks Consensus Estimate for 2017 earnings has been revised higher from $2.10 to $2.15. Also, for 2018, estimates were raised from $2.44 to $2.82.
Newfield has an impressive earnings surprise history. The upstream player managed to surpass the Zacks Consensus Estimate in three of the prior four quarters, the average positive surprise being 18.6%. Also, we expect the company to witness year-over-year earnings improvement of 110.8% in 2017 and 31.4% in 2018.
The business scenario looks profitable as West Texas Intermediate (WTI) oil is trading above the $60-per-barrel psychological mark, way higher than the historical low touched in February 2016. Also, natural gas crossed the mark of $3 per million British Thermal Unit (BTU). Overall, the favorable commodity pricing scenario could fetch the exploration and production company attractive cashflow.
The healthy commodity prices are especially favorable for Newfield as the company has a premium inventory of drilling wells in prospective oil and gas resources. In the liquid-rich Anadarko Basin, the upstream energy player has 350,000 net acres.
Newfield has no current debt and its long-term debt has declined steeply since 2014. Moreover, cash & equivalents rose significantly since 2016, reflecting strong balance sheet.
The company’s pricing chart looks impressive. Over the last six months, the stock has rallied 27%, outperforming the Zacks Investment Research
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