Hess Earnings: Here’s Why Investors are Not Excited

Hess Corporation (NYSE:HES) delivered a profit and missed Wall Street’s expectations, BUT beat the revenue expectation. The revenue beat is a positive sign to shareholders seeking high growth out of the company. Shares are down 0.23%.

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Hess Corporation Earnings Cheat Sheet

Results: Net income increased to $409 million ($1.2 per diluted share) in the quarter versus a net loss of $131 million in the year-earlier quarter.

Revenue: Rose 9.9% to $9.7 billion from the year-earlier quarter.

Actual vs. Wall St. Expectations: Hess Corporation reported adjusted net income of $1.2 per share. By that measure, the company missed the mean analyst estimate of $1.21. It beat the average revenue estimate of $9.63 billion.

Important Catalysts: Exploration and Production earnings were $517 million in the fourth quarter of 2012, compared with $527 million in the fourth quarter of 2011. Fourth quarter oil and gas production was 396,000 barrels of oil equivalent per day, up from 367,000 barrels of oil equivalent per day in the fourth quarter a year ago, primarily reflecting an increase in production from the Bakken oil shale play and the resumption of operations in Libya, partly offset by the shut-in of the Valhall Field in Norway for the quarter due to the redevelopment project. Net production from the Bakken oil shale play averaged 64,000 barrels of oil equivalent per day in the fourth quarter of 2012, an increase of 68% from 38,000 barrels of oil equivalent per day in the same period last year. The Corporation’s average worldwide crude oil selling price, including the effect of hedging, was $84.46 per barrel, down from $89.70 per barrel in the same quarter a year ago. The average worldwide natural gas selling price was $6.60 per mcf in the fourth quarter of 2012, up from $6.32 per mcf in the fourth quarter of 2011. Fourth quarter 2012 exploration expenses included total dry hole expenses of $167 million ($102 million after-tax), primarily associated with two exploration wells, Ness Deep in the Gulf of Mexico and Ajek-1 offshore, Indonesia.

Key Stats:

Revenue increased 0.82% from $9.62 billion in the previous quarter. Net income decreased 26.57% from $557 million in the previous quarter.

Looking Forward: Analysts have a more negative outlook for the company’s next-quarter performance. Over the past three months, the average estimate for next quarter’s earnings has fallen from a profit of $1.65 to a profit $1.63. For the current year, the average estimate has moved up from a profit of $5.83 to a profit of $5.85 over the last ninety days.

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(Company fundamentals provided by Xignite Financials.)