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After ConocoPhillips reported its November results, we updated our revenue and profit projections for the year ahead. We moved our rating from Buy to Watch. We have added the potential impact of a multi-billion dollar environmental fine in Kazakhstan and production risks from Middle East conflict to what we track. We also increased our assumption for how much cash the company returns to its owners through dividends and share buybacks.
ConocoPhillips reported adjusted earnings of $3.27 per share, comfortably beating the $3.05 analysts expected. The company brought in $19 billion in revenue as it continues to benefit from its low-cost drilling spots in the Permian Basin. This efficiency allowed it to generate $7.2 billion in cash from its operations during the quarter.
Management is using that cash to reward owners, raising the quarterly dividend by 11 percent to $0.93 per share. The company also spent $2.4 billion buying back its own stock, which reduces the total number of shares and makes each remaining share more valuable. For long-term investors, this confirms the company can still hand back significant cash even as it works to integrate its recent purchase of Marathon Oil.
See the full quarter, and how our tracked metrics did
Source: 8-K filing
Oil prices fell more than 4 percent on Monday as new peace talks eased concerns that conflict in the Middle East would cut off global supplies. These worries had pushed prices higher last week, but the shift toward diplomacy has reversed those gains.
As one of the world's largest oil producers, ConocoPhillips' profits are directly tied to the price of the crude it pumps. While the company is built to stay profitable even at lower prices, a sharp drop in the market price of oil means it brings in less cash for every barrel it sells.
Source: WSJ
ConocoPhillips is scheduled to share its latest results on November 5. Analysts expect the company to report profit of about $3.06 per share and revenue of roughly $18.56 billion. Beyond the numbers, the focus will likely be on how well the company is controlling costs in its main drilling regions and whether it plans to keep returning a large portion of its cash to shareholders through dividends and buybacks.
Susquehanna raised its price target from $161 to $175 while keeping a positive rating on the company. This move suggests the firm sees more room for the stock to rise from its current price of about $146. Other analysts have also been adjusting their views lately, bringing the average target across all firms to $157. These updates often follow changes in oil prices or new data on how efficiently the company is pumping oil from its low-cost drilling sites.
Source: Susquehanna
Management consistently sets a bar they can clear, delivering seven beats in the last eight quarters. This track record suggests their forecasts are reliable even as energy prices swing.
| Expectation | |
|---|---|
| EPS | $3.05 |
| Revenue | $18.59B |
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