What's In The Cards For Eni SpA (E) This Earnings Season?

Integrated energy company Eni SpA (TO:E) is set to report fourth-quarter 2016 results, before the closing bell on Mar 1.

Surprise History

Eni’s track record has been disappointing so far. In the preceding quarter, the company had a negative earnings surprise of 244.44%. It is to be noted that over the four trailing quarters, the company delivered positive earnings surprise once but missed estimates in all the other occasions. The average negative earnings surprise for the company for the preceding four quarters was 202.66%.

Let’s see how things are shaping up prior to this announcement.

Factors at Play

Based in Rome, Italy, Eni with its consolidated subsidiaries is engaged in oil and gas, electricity generation, petrochemicals, oilfield services and engineering industries. The company’s major business segments are Exploration and Production (E&P), Gas and Power, and Refining and Marketing.

The energy industry witnessed a lull market since mid-2014 after oil and natural gas supply exceeded demand and brought down the prices of various stocks. However, with the OPEC agreement of output curb, the scenario has been improving as prices of both oil and natural gas are rebounding.

The OPEC deal is likely to have a positive impact on the upstream segment of the Eni by boosting drilling activities. However, the rising oil price is likely to be unfavorable for the refining segment leading to lower margins.

During the October to December quarter, the shares of Eni rallied 11% as against 8% gain for the Zacks categorized Oil & Gas International Integrated industry.

If we take a look at the financials of Eni SpA, the company has sufficient cash balance and a manageable debt-to-capitalization ratio. However, certain data like earnings before interest and tax show a downward trend.

Earnings Whispers

Our proven model does not conclusively show that Eni SpA is likely to beat earnings in the to-be reported quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here, as you will see below.

Zacks ESP: Earnings ESP, which represents the difference between the Most Accurate estimate and Zacks Consensus Estimate, stands at 0.00%. This is because the Most Accurate estimate and the Zacks Consensus Estimate stand at a loss of 12 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Eni SpA carries a Zacks Rank #3, which when combined with a 0.00% ESP, makes surprise prediction difficult.

We caution against Sell-rated stocks (#4 or 5) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks to Consider

Here are some companies for investors to consider, that, according to our model have the right combination of elements to post an earnings beat this quarter.

YPF Sociedad Anonima (NYSE:YPF) has an Earnings ESP of +23.08% and a Zacks Rank #3. The company is set to release its earnings report on Mar 2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Ring Energy, Inc (TO:E) has an Earnings ESP of 50% and a Zacks Rank #3. The company is expected to release its earnings on Mar 21.

Sunrun Inc. (NASDAQ:RUN) has an Earnings ESP of +244.44 and a Zacks Rank #1. The company is expected to release earnings result on Mar 8.

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