2 Energy Stocks to Buy Before Earnings This Week

With the incredible performance of many Oil and Energy stocks over the last few years, fourth-quarter earnings will be critical in seeing if there is more upside among these equities in 2023.

Here are two Oil and Energy stocks that investors might want to consider buying going into their fourth-quarter earnings reports.

Halliburton HAL

As one of the largest oilfield service providers in the world, there could be more upside in Halliburton (HAL) stock going into its Q4 earnings report on January 24.

Halliburton currently sports a Zacks Rank #2 (Buy) with earnings estimate revisions trending higher for its current fiscal 2022 and FY23. Rising earnings estimates for Fiscal 2023 are especially intriguing as the company rounds out FY22 with its Q4 report.

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Q4 Preview: Halliburton looks poised to post another quarter of impressive growth following a standout Q3 that saw sales increase 39% year over year at $5.35 billion. Continuing this trend, Q4 sales are expected at $5.58 billion which would represent 2% growth from last quarter and 30% year-over-year growth with sales at $4.28 billion in Q4 2021.

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On the bottom line, earnings are forecasted at $0.67 a share which is an 11% increase from last quarter and 96% YoY growth with earnings at $0.36 per share in the prior-year quarter. This would round out fiscal year 2022 seeing 95% YoY growth at $2.11 per share compared to $1.08 a share in FY21.

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Earnings ESP:  The Zacks Expected Surprise Prediction is virtually flat for Halliburton’s Q4 earnings with the Zacks Consensus at $0.67 per share and the Most Accurate Estimate at $0.67 a share as well. Still, Halliburton has beaten earnings expectations by 7.14% and 8.89% respectively in the last two quarters making the likelihood of topping bottom-line estimates more probable considering its somewhat surprising growth over the last few quarters.

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Takeaway:  Another impressive quarter could see Halliburton surpassing its 52-week highs of $43.99 a share seen last June as the rising earnings estimate revisions are a positive sign that the company could top Q4 expectations and offer strong guidance for fiscal 2023.

NextEra Energy Partners NEP

Another company that has received favorable earnings estimate revisions leading up to its fourth-quarter earnings report on January 25 is NextEra Energy Partners (NEP). 

NextEra Energy stock is also sporting a Zacks Rank #2 (Buy) with earnings estimates noticeably up for its current fiscal year 2022 and FY23 as the limited partnership focused on clean energy projects pushes closer to its 52-week highs as well.

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Q4 Preview:  NextEra Energy is expected to have a stellar quarter in regard to year-over-year growth with sales expected at $313.13 million, up 35% from Q4 2021. Earnings are projected at $0.52 per share compared to -$0.12 a share in the prior year quarter.

This would round out NextEra’s fiscal 2022 with sales up 28% at $1.26 billion and earning up a very impressive 225% to $5.76 a share compared to $1.77 in 2021.

Earnings ESP:  While NextEra is expected to have a strong quarter, the Zacks ESP indicates NEP could miss earnings expectations by -4.46% with the Zacks Consensus for NEP’s Q4 earnings at $0.52 per share and the Most Accurate Consensus at $0.50 per share.

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Takeaway:  Despite the probability of NextEra missing Q4 earnings expectations the rising earnings estimate revisions are a positive sign for a company that has beaten bottom-line expectations for three consecutive quarters. Earnings Estimates trending higher for Fiscal 2023 is also significant as NextEra’s FY22 will be very tough to follow and annual earnings are expected to dip -48% year over year.

However, trading around $74 a share and 24.7X earnings, NEP stock is still 25% from its decade-long high of 33X earnings and also trades at a slight discount to the median of 25.4X.

Bottom Line

Halliburton (HAL) and NextEra Energy Partners (NEP) look poised to have strong fourth-quarter earnings reports and the rising earnings estimate revisions are a great sign that both companies may give positive guidance for fiscal 2023. This could be a catalyst that boosts both Halliburton and NextEra stock closer to their 52-week highs and perhaps eclipse these levels. 

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