Yahoo Finance Why Is Ovintiv (OVV) Down 6.5% Since Last Earnings Report?
A month has gone by since the last earnings report for Ovintiv (OVV). Shares have lost about 6.5% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Ovintiv due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Ovintiv Q1 Earnings Beat Estimates, Revenues Miss
Ovintiv Inc. reported first-quarter 2024 adjusted earnings per share (EPS) of $1.44, which beat the Zacks Consensus Estimate of $1.32. The beat can be attributed to lower expenses year over year. However, the bottom line declined from the year-ago level of $1.82 per share.
Total revenues of $2.4 billion decreased 7.8% from the year-ago quarter’s figure and missed the Zacks Consensus Estimate by 9.9%. This was due to a year-over-year decline in revenues from products and services.
OVV’s board of directors declared a quarterly dividend of 30 cents per share for its common shareholders of record as of Jun 14, 2024. The dividend will be paid out on Jun 28.
During the reported quarter of 2024, the company distributed $328 million to its shareholders, comprising $248 million in share repurchases and a base dividend of roughly $80 million.
OVV’s board of directors declared a quarterly dividend of 30 cents per share for common shareholders of record as of Jun 15, 2023, which will be paid out on Jun 30. This represents a 20% increase from the previous level.
Production & Prices
Total first-quarter production was 573,800 barrels of oil equivalent per day (BOE/d) compared with 511,400 BOE/d in the prior-year period. The figure beat our projection of 565,800 BOE/d
The higher volumes can be attributed to a 6% year-over-year increase in natural gas production that amounted to 1,648 million cubic feet per day (MMcf/d). Production of liquids increased to 299,300 BOE/d.
Ovintiv's realized natural gas price was $2.56 per thousand cubic feet compared with the year-ago quarter’s figure of $3.80.However, the reported figure beat our projection of $2.41 per thousand cubic feet.
The realized oil price increased to $75.66 per barrel from $74.06 in the first quarter of 2023. The figure also beat our projection of $75.58.
Costs, Capex & Balance Sheet
Total expenses in the reported quarter decreased to $1.86 billion from the year-ago figure of $1.87 billion.
Ovintiv’s cash from operating activities in the quarter under review was $659 million, down from the year-ago figure of $1.1 billion. Its capital investments amounted to $591 million compared with $610 million in the year-ago period. Ovintiv generated non-GAAP free cash flow of $444 billion in the reported quarter.
As of Mar 31, the company had cash and cash equivalents worth $5 million and long-term debt of $5.5 billion. Its debt-to-capitalization at the end of the reported quarter was 37.7%.
Guidance
The energy company, which is primarily engaged in oil and gas exploration and production, expects capital expenditures in the range of $2.2-$2.4 billion for full-year 2024 and in the band of $610-$650 million for the second quarter.
The company now projects crude oil and condensate volumes to be in the range of 202,000-208,000 barrels per day (bpd) for 2024 and in the band of 205,000-209,000 bpd for the second quarter. Natural gas production is estimated to be in the 1,600-1,650 MMcf/d range for the second quarter and between 1,600 MMcf/d and 1,650 MMcf/d for the entire year.
In the second quarter of 2024, share buybacks are expected to be worth $182 million.
Production Investment Plan 2024
To boost production from its assets, Ovintiv plans to invest approximately $1.35 to $1.45 billion in 2024 in the Permian asset to bring on 120 to 130 net wells and approximately $425 to $475 million in the Montney asset to bring on 60 to 70 net wells. Additionally, OVV plans to invest approximately $300 to $350 million in 2024 in the Uinta asset to bring on 25 to 30 net wells and approximately $100 to $125 million in the Anadarko asset to bring on seven to 10 net wells.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended upward during the past month.
VGM Scores
Currently, Ovintiv has a nice Growth Score of B, however its Momentum Score is doing a bit better with an A. Following the exact same course, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Ovintiv has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Ovintiv Inc. (OVV) : Free Stock Analysis Report
