HES’s 4Q17 earnings
Hess Corporation (HES) will release its fiscal 4Q17 and fiscal 2017 earnings on February 5, 2018.
Hess’s 4Q17 revenue estimate
Hess’s 4Q17 revenue estimate is $1.3 billion, while its fiscal 2017 revenue estimate is ~$5.3 billion. By comparison, Hess reported revenues of $1.19 billion in 4Q16, while its fiscal 2016 revenues came in at $4.8 billion. As you can see from the graph, analysts expect Hess’s revenues to rise on a YoY (year-over-year) basis.
This might be due to higher crude oil prices in 2017 compared with 2016. Crude oil prices averaged around $50.91 per barrel in 2017, compared with $43.41 in 2016. On a YoY basis, crude oil prices (USO) (UCO) have risen ~22%, while the energy sector (XLE) has risen 3% in the same period.
Notably, HES’s revenues came in higher than the analysts’ estimates in previous quarters—particularly in 3Q17. Investors will have to wait and watch to know if the trend will continue in 2018.
Hess’s 4Q17 EPS estimates
Hess’s 4Q17 loss per share estimate is $0.89, while its 2017 loss per estimate is $4.46. By comparison, the company reported a net loss of $1.01 in 4Q16. In fiscal 2016, Hess reported a net loss of $4.94.
As you can see, like its revenues, HES’s earnings are also expected to improve in 4Q17 and in fiscal 2017. In its 3Q17 earnings release, HES management had noted that the company’s 4Q17 production would be negatively impacted by downtime resulting from the hurricanes in 3Q17. Investors will, of course, be watching to see to what extent this would affect 4Q17 earnings.
Why Hess has been in the news
On December 15, 2017, activist hedge fund Elliot Management renewed its mission to bring changes to Hess (HES). Tensions between Hess and Elliott date back to 2013, when the hedge fund targeted the company, saying that the board lacked oversight and that it needed to streamline its focus.
The activist fund seeks now either to oust John Hess, the current CEO (chief executive officer), or to have him sell all or part of his share of the company. The hedge fund also believes that Hess would be better off buying back stock, which has been perceived as undervalued.
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