On Dec 25, we upgraded Eclipse Resources Corporation ECR to a Zacks Rank #1 (Strong Buy). Per the Zacks model, companies sporting a Zacks Rank #1are likely to outperform the broader market in the next one to three months.
Why the Upgrade?
Eclipse Resources, primarily an upstream player, has properties in the Appalachian Basin. The company focuses on developing the Utica and Marcellus Shales in southeastern Ohio. As of Sep 30, 2018, the company is positioned in about 196,500 net acres, of which, about 134,200 net acres is located in the Utica Shale and about 14,500 net acres are inthe highly liquids rich area of the Marcellus Shale in Eastern Ohio. For 2018, the company expects production in the range of 337-342 million cubic feet per day (MMcfe/d), up from production of 311.7 MMcfe/d in 2017. Higher production estimates are likely to be supported by strong foothold in the prospective Marcellus and Utica Shale plays.
The company is merging with Blue Ridge Mountain Resources and the transaction is expected to close during the fourth quarter of 2018. The transaction is expected to generate significant operating synergies and boost cashflows. It will enable Eclipse Resources to enhance its portfolio of core Utica locations and Marcellus.
Eclipse Resources has an impressive earnings surprise history. The upstream player beat the Zacks Consensus Estimate for earnings in all of the trailing four quarters, the average being 261.1%. Also, we expect the company to post year-over-year earnings improvement of 800% in 2017 and 194.4% in 2018.
For fourth-quarter 2018, the Zacks Consensus Estimate for earnings per share has been revised higher in the last 30 days. The consensus estimate for 2018 earnings was revised to 9 cents from 8 cents.
Other Stocks to Consider
A few other top-ranked players in the energy space are SunCoke Energy, Inc SXC, Shell Midstream Partners, L.P SHLX and Unit Corporation UNT. You can see the complete list of today’s Zacks #1 Rank stocks here.
SunCoke acquires, owns and operates coke making as well as coal mining operations. The company delivered average positive earnings surprise of 302.6% in the last four quarters.
Headquartered in Houston, TX, Shell Midstream Partnersowns, operates, develops and acquires pipelines and other midstream assets. The company is expected to witness year-over-year earnings growth of 18.7% in 2018.
Unit Corp is a diversified energy company. The company has an average positive surprise of 21.2% in the last four quarters.
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