Matador Resources Q3 Earnings: Is NYSE:MTDR Manipulating Earnings?

in EARNINGS/INVESTING IDEAS by

Matador Resources Company (NYSE:MTDR) is scheduled to report Q3 earnings results after markets close for trading on October 27, 2020.

The company is expected to report earnings of -$0.08/share on revenue of $190.2 million. The consensus earnings per share (EPS) of -$0.08/share is based on a poll of 12 analysts and represents a decline in eps of −125.9% over the same quarter last year, when the company reported earnings of $0.32/share.

The revenue forecast of $190.2 million based on a poll of 4 analysts implies a year-over-year (YoY) decline in revenue of −31.9%. Last year the company reported $279.4 million in revenue for the quarter.

Expected to report EPS of -$0.08/share for Q3, 2020
Metric Expected Prior Year YoY Change
Revenue $190.15 $279.40 −31.9%
EPS -$0.08 $0.32 −125.9%

Earnings Call Trends

Management has been great at managing analyst expectations historically. The company has a perfect record over the last 8 tracked quarters of exceeding earnings guidance.

What are your expectations from Matador Resources Company for earnings this quarter? Let us know in the comments!

Analyst Expected vs. Reported EPS
Quarter Expected Reported Surprise Result
Q2, 2020 -$0.15 -$0.03 80.5% Beat
Q1, 2020 $0.01 $0.20 1,624.1% Beat
Q4, 2019 $0.30 $0.39 29.7% Beat
Q3, 2019 $0.22 $0.32 44.9% Beat
Q2, 2019 $0.20 $0.30 49.0% Beat
Q1, 2019 $0.16 $0.19 15.3% Beat
Q4, 2018 $0.27 $0.37 38.5% Beat
Q3, 2018 $0.37 $0.48 31.0% Beat

In the following table, we summarize the company’s stock price movements after earnings releases. The “Price Day Prior” column shows the closing stock price on the day before the earnings report, and the “Price Next Day” column shows the stock price at the end of the trading day after the earnings report. After the last earnings report for the period ending June 30, 2020, the stock price reacted by increasing 2.0%.

Stock Price Performance After Earnings
Report Date Price Day Prior Price Next Day Change % Result
July 28, 2020 $9.13 $9.31 2.0% Increase
April 29, 2020 $4.93 $7.04 42.8% Increase
February 25, 2020 $12.20 $10.76 −11.8% Decline
October 29, 2019 $14.09 $13.90 −1.3% Decline

The other question to consider is one of earnings manipulation. There is a lot of pressure on management each quarter to deliver on earnings expectations. The Beneish M-Score is a statistical model that provides some insight into whether the company might be manipulating earnings. With a Beneish M-Score of −1.20, the model suggests that the company is likely an earnings manipulator. A value of −1.20 implies a 11.4% chance of earnings manipulation.

Fundamentals And Technical Analysis

Matador Resources Company is currently trading at $8.57/share, up 5.0% for the day. The company is trading at approximately 43.2% of its 52-week high of $19.82/share. The company’s stock price is down −7.9% since the last earnings report and down −4.1% over the previous week.

The company’s 14 Day Relative Price Index (RSI) of 46.37 suggests the company is trading in technically neutral territory. The RSI is considered overbought when above 70 and oversold when below 30.


NYSE:MTDR Stock Price Chart
Source: Finbox

The current share price implies a price-to-earnings (P/E) multiple of −6.27 and a forward P/E multiple of 59.59.

Matador Resources Company’s current share price also implies a price-to-book (P/B) multiple of 0.61. The following table summarizes some other key fundamental ratios:

Data as of October 21, 2020
Metric Value
Last Reported Fiscal Period Key FY2020.Q2
Period End Date June 30, 2020
Stock Price (Current) $8.57
P/E Ratio −6.3x
P/E Ratio (Fwd) 59.6x
PEG Ratio 0.0
Total Debt / Total Capital 61.8%
Levered Free Cash Flow -$401.6 million
EV / EBITDA 4.9x

Finbox

Matador Resources Company is a small-cap stock with a market capitalization of $1.001 billion and a total enterprise value of $2.982 billion. The company operates in the Energy sector and the Oil, Gas & Consumable Fuels industry.

Matador Resources Company, an independent energy company, engages in the exploration, development, production, and acquisition of oil and natural gas resources in the United States. It operates in two segments, Exploration and Production; and Midstream. The company primarily holds interests in the Wolfcamp and Bone Spring plays in the Delaware Basin in Southeast New Mexico and West Texas. It also operates the Eagle Ford shale play in South Texas; and the Haynesville shale and Cotton Valley plays in Northwest Louisiana. In addition, the company conducts midstream operations in support of its exploration, development, and production operations; provides natural gas processing and oil transportation services; and offers oil, natural gas, and salt water gathering services, as well as salt water disposal services to third parties. As of December 31, 2019, its estimated total proved oil and natural gas reserves were 252.5 million barrels of oil equivalent, including 148.0 million stock tank barrels of oil and 627.2 billion cubic feet of natural gas. The company was formerly known as Matador Holdco, Inc. and changed its name to Matador Resources Company in August 2011. Matador Resources Company was founded in 2003 and is headquartered in Dallas, Texas.

Expertise: financial technology, analyzing market trends. Brian is a founder at finbox.io, where he’s focused on building tools that make it faster and easier for investors to research stock fundamentals. Brian’s background is in physics & computer science and previously worked as a software engineer at GE Healthcare. He enjoys applying his expertise in technology to help find market trends that impact investors. Brian can be reached at brian@finbox.io or at +1 (516) 778-6257.

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