Comstock Resources Q3 Earnings: Is NYSE:CRK Cheap at 0.9x Price/Book?

in EARNINGS/INVESTING IDEAS by

Comstock Resources, Inc. (NYSE:CRK) is scheduled to report Q3 earnings results after markets close for trading on November 4, 2020.

The company is expected to report earnings of $0.01/share on revenue of $222.5 million. The consensus earnings per share (EPS) of $0.01/share is based on a poll of 9 analysts and represents a decline in eps of −94.8% over the same quarter last year, when the company reported earnings of $0.17/share.

The revenue forecast of $222.5 million based on a poll of 6 analysts implies a year-over-year (YoY) decline in revenue of −0.8%. Last year the company reported $224.4 million in revenue for the quarter.

Expected to report EPS contraction of −94.8% for Q3, 2020
Metric Expected Prior Year YoY Change
Revenue $222.54 $224.44 −0.8%
EPS $0.01 $0.17 −94.8%

Earnings Call Trends

Historically, management has exceeded analyst expectations 3 out of the last 7 tracked quarters, missed 3 quarters, and met expectations 1 quarter.

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

Analyst Expected vs. Reported EPS
Quarter Expected Reported Surprise Result
Q2, 2020 $0.01 $0.01 0% Met
Q1, 2020 $0.07 $0.12 66.9% Beat
Q4, 2019 $0.20 $0.22 7.6% Beat
Q3, 2019 $0.12 $0.17 41.5% Beat
Q2, 2019 $0.18 $0.12 −34.6% Missed
Q1, 2019 $0.28 $0.22 −22.8% Missed
Q4, 2018 $0.36 $0.35 −1.7% 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 falling −4.1%.

Stock Price Performance After Earnings
Report Date Price Day Prior Price Next Day Change % Result
August 5, 2020 $6.15 $5.90 −4.1% Decline
May 6, 2020 $7.65 $7.30 −4.6% Decline
February 26, 2020 $5.93 $5.39 −9.1% Decline
November 7, 2019 $7.04 $7.56 7.4% Increase

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 −2.66, the model suggests that the company is not likely to be an earnings manipulator. A value of −2.66 implies a 0.4% chance of earnings manipulation.

Fundamentals And Technical Analysis

Comstock Resources, Inc. is currently trading at $5.29/share, down −3.5% for the day. The company is trading at approximately 62.5% of its 52-week high of $8.50/share. The company’s stock price is down −10.3% since the last earnings report and down −8.6% over the previous week. The company’s 14 Day Relative Price Index (RSI) of 51.09 suggests the company is trading in technically neutral territory. The RSI is considered overbought when above 70 and oversold when below 30.


NYSE:CRK Stock Price Chart
Source: Finbox

The current share price implies a price-to-earnings (P/E) multiple of 133.66 and a forward P/E multiple of 22.11.

Comstock Resources, Inc.’s current share price also implies a price-to-book (P/B) multiple of 0.94. The following table summarizes some other key fundamental ratios:

Data as of October 28, 2020
Metric Value
Last Reported Fiscal Period Key FY2020.Q2
Period End Date June 30, 2020
Stock Price (Current) $5.29
P/E Ratio 133.7x
P/E Ratio (Fwd) 22.1x
PEG Ratio −1.5
Total Debt / Total Capital 63.4%
Levered Free Cash Flow $1.436 million
EV / EBITDA 6.2x

Finbox

Comstock Resources, Inc. is a small-cap stock with a market capitalization of $1.275 billion and a total enterprise value of $3.945 billion. The company operates in the Energy sector and the Oil, Gas & Consumable Fuels industry.

Comstock Resources, Inc., an independent energy company, engage in the acquisition, exploration for, development, and production of oil and natural gas properties, primarily in Texas, Louisiana, and North Dakota. As of December 31, 2019, the company had 5.3 trillion cubic feet of natural gas equivalent and 16.7 million barrels of oil equivalent of proved reserves. It also owns an interest in 2,800 producing oil and natural gas wells. The company was founded in 1983 and is headquartered in Frisco, Texas.

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