Diamondback Energy (NasdaqGS:FANG) Q3 2020 Earnings Prep

in EARNINGS/INVESTING IDEAS by

Diamondback Energy, Inc. (NasdaqGS:FANG) is scheduled to report Q3 earnings results after markets close for trading on November 2, 2020.

The company is expected to report earnings of $0.36/share on revenue of $712.3 million. The consensus earnings per share (EPS) of $0.36/share is based on a poll of 27 analysts and represents a decline in eps of −75.4% over the same quarter last year, when the company reported earnings of $1.47/share.

The revenue forecast of $712.3 million based on a poll of 16 analysts implies a year-over-year (YoY) decline in revenue of −26.9%. Last year the company reported $975 million in revenue for the quarter.

Expected to report EPS contraction of −75.4% for Q3, 2020
Metric Expected Prior Year YoY Change
Revenue $712.27 $975.00 −26.9%
EPS $0.36 $1.47 −75.4%

Earnings Call Trends

Historically, management has exceeded analyst expectations 4 out of the last 8 tracked quarters, and missed expectations 4 quarters.

What are your expectations from Diamondback Energy, Inc. for earnings this quarter? Let us know in the comments!

Analyst Expected vs. Reported EPS
Quarter Expected Reported Surprise Result
Q2, 2020 $0.03 $0.15 450.5% Beat
Q1, 2020 $1.30 $1.45 12.0% Beat
Q4, 2019 $1.82 $1.93 5.9% Beat
Q3, 2019 $1.71 $1.47 −14.2% Missed
Q2, 2019 $1.75 $1.70 −3.0% Missed
Q1, 2019 $1.35 $1.39 3.2% Beat
Q4, 2018 $1.61 $1.21 −24.8% Missed
Q3, 2018 $1.72 $1.67 −2.9% Missed

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 3.0%.

Stock Price Performance After Earnings
Report Date Price Day Prior Price Next Day Change % Result
August 3, 2020 $39.86 $41.07 3.0% Increase
May 4, 2020 $40.28 $40.33 0.1% Increase
February 18, 2020 $74.97 $79.29 5.8% Increase
November 5, 2019 $90.36 $77.20 −14.6% 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 −4.01, the model suggests that the company is not likely to be an earnings manipulator. A value of −4.01 implies a 0.0% chance of earnings manipulation.

Fundamentals And Technical Analysis

Diamondback Energy, Inc. is currently trading at $27.52/share, down −5.2% for the day. The company is trading at approximately 28.4% of its 52-week high of $96.92/share. The company’s stock price is down −33.0% since the last earnings report and down −3.3% over the previous week.

The company’s 14 Day Relative Price Index (RSI) of 41.72 suggests the company is trading in technically neutral territory. The RSI is considered overbought when above 70 and oversold when below 30.


NasdaqGS:FANG Stock Price Chart
Source: Finbox

The current share price implies a price-to-earnings (P/E) multiple of −1.56 and a forward P/E multiple of 11.00.

Diamondback Energy, Inc.’s current share price also implies a price-to-book (P/B) multiple of 0.41. The following table summarizes some other key fundamental ratios:

Data as of October 27, 2020
Metric Value
Last Reported Fiscal Period Key FY2020.Q2
Period End Date June 30, 2020
Stock Price (Current) $27.52
P/E Ratio −1.6x
P/E Ratio (Fwd) 11.0x
PEG Ratio 0.0
Total Debt / Total Capital 51.1%
Levered Free Cash Flow -$718 million
EV / EBITDA 4.1x

Finbox

Diamondback Energy, Inc. is a mid-cap stock with a market capitalization of $4.344 billion and a total enterprise value of $11.382 billion. The company operates in the Energy sector and the Oil, Gas & Consumable Fuels industry.

Diamondback Energy, Inc., an independent oil and natural gas company, focuses on the acquisition, development, exploration, and exploitation of unconventional and onshore oil and natural gas reserves in the Permian Basin in West Texas. It primarily focuses on the development of the Spraberry and Wolfcamp formations of the Midland basin; and the Wolfcamp and Bone Spring formations of the Delaware basin, which are part of the Permian Basin in West Texas and New Mexico. As of December 31, 2019, the company’s total acreage position was approximately 455,378 gross acres in the Permian Basin; and estimated proved oil and natural gas reserves were 1,127,575 thousand barrels of crude oil equivalent. It also held working interests in 2,656 gross producing wells, as well as royalty interests in 4,161 additional wells. In addition, the company owns mineral interests approximately 814,224 gross acres and 24,304 net royalty acres in the Permian Basin and Eagle Ford Shale; and owns, operates, develops, and acquires midstream infrastructure assets, such as 867 miles of crude oil gathering pipelines, natural gas gathering pipelines, and an integrated water system in the Midland and Delaware Basins of the Permian Basin. Diamondback Energy, Inc. was founded in 2007 and is headquartered in Midland, Texas.

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