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The oil/energy sector is under pressure in the second quarter of 2025, as falling crude oil prices and narrowing profit margins create a difficult operating environment. With roughly 25% of S&P 500 energy companies having reported second-quarter results, early indications confirm that the challenges are impacting earnings. Although a rise in natural gas demand has offered some support, it hasn’t been sufficient to offset the broader issues affecting the industry. Ongoing global economic uncertainties and fears of oversupply continue to weigh heavily on the oil market, resulting in expectations of declining earnings within the energy space. This trend contrasts sharply with the growth seen in other industries. The pressure largely arises from opposing trends in crude oil and natural gas prices, which are affecting company results as well as investor outlook.
During second-quarter 2025, crude oil experienced a marked drop in prices. The average price for West Texas Intermediate crude slid to $64.63 per barrel, reflecting a 20.9% decrease from $81.71 in the same period the previous year. This drop was due to intensifying trade tensions between the United States and China, sparking worries about a slowdown in global economic activity and potential oversupply in oil markets. Additionally, rising fuel stockpiles and downward revisions in demand forecasts added to the downward pressure on oil prices.
Conversely, natural gas prices saw a significant uptick. The Henry Hub spot price averaged $3.19 per million British thermal units (MMBtu) in the second quarter, which is a 50% increase from $2.09 per MMBtu in second-quarter 2024. This surge was fueled by factors such as colder weather boosting demand, higher electricity usage, and robust LNG exports straining domestic supply levels. Reduced inventory and ongoing supply concerns also contributed to pushing prices higher.
According to the latest Zacks Earnings Trends report, the sector is projected to see a steep -22.9% year-over-year decline in earnings, worsening from the 10.1% drop in the first quarter. This downturn is further reflected in revenues, which are expected to fall 6.8% against the S&P 500's overall 5.2% growth. The sector's struggles are evident in its below-average earnings beat rate of 77.8%, trailing the broader market's 82.8%.
Profit margins remain under strain due to weak pricing power and rising operational costs, with net margins contracting by 1.54% — one of the weakest performances across all sectors. The Energy sector's challenges are particularly stark when compared to strong performers like Tech (+14.5% earnings growth), Finance (+16.7%), and Consumer Discretionary (+109.7%). In fact, the S&P 500's overall earnings growth of 7.6% improves to 9.5% when excluding Energy, highlighting the sector's drag on market performance.
Taking these factors into account, we examine how Oil/Energy companies are positioned ahead of their second-quarter earnings on Aug. 6, 2025, and how they are confronting the ongoing challenges within the industry.
Our proprietary model shows that the best chances of an earnings beat occur when a company has a positive Earnings ESP, along with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold).
APA Corporation APA is scheduled to report quarterly earnings after the market opens. The chances of a Houston, TX-based oil and gas exploration and production company delivering an earnings beat this time around are low, as it has an Earnings ESP of 0.00% and a Zacks Rank #3 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for APA Corporation’s earnings is pegged at 45 cents per share, suggesting a 61.54% decrease from the prior-year reported figure. Regarding earnings surprises, APA Corporation’s earnings beat the Zacks Consensus Estimate in two of the last four quarters and missed in the other two, resulting in an average surprise of 7.35%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
This trend is visually illustrated in the chart below:
APA Corporation price-eps-surprise | APA Corporation Quote
Delek US Holdings, Inc. DK is scheduled to report quarterly earnings before the market opens. The chances of a Brentwood, TN-based oil and gas refining and marketing company delivering an earnings beat this time around are low, as it has an Earnings ESP of -5.81% and a Zacks Rank #3 at present.
The Zacks Consensus Estimate for Delek US Holdings’ loss is pegged at 92 cents per share, suggesting a result in line with the prior-year reported figure. On the earnings front, Delek US Holdings’ earnings beat the Zacks Consensus Estimate trice in the last four quarters and missed once, delivering an average surprise of 15.08%.
The chart below provides a clear view of these results:
Delek US Holdings, Inc. price-eps-surprise | Delek US Holdings, Inc. Quote
On the other hand, Energy Transfer ET is scheduled to report quarterly earnings following the market open. The chances of a Dallas, TX-based oil and gas storage and transportation company delivering an earnings beat this time around are low, as it has an Earnings ESP of -2.11% and a Zacks Rank #3 at present.
The Zacks Consensus Estimate for Energy Transfer’s earnings is pegged at 32 cents per share, suggesting an 8.57% decrease from the prior-year reported figure. In terms of earnings surprises, Energy Transfer’s earnings beat the Zacks Consensus Estimate twice and missed twice over the last four quarters, resulting in an average negative surprise of 3.28%.
This is captured in the chart below:
Energy Transfer LP price-eps-surprise | Energy Transfer LP Quote
Similarly, Murphy Oil Corporation MUR is slated to report quarterly earnings after the market opens. The chances of a Houston, TX-based oil and gas exploration and production company delivering an earnings beat this time around are low, as it has an Earnings ESP of 0.00% and a Zacks Rank #3 at present.
The Zacks Consensus Estimate for Murphy Oil’s earnings is pegged at 21 cents per share, suggesting a 74.07% decrease from the prior-year reported figure. When it comes to earnings surprises, Murphy Oil’s earnings beat the Zacks Consensus Estimate twice in the last four quarters and missed twice, delivering an average negative surprise of 3.13%.
The chart below illustrates this performance:
Murphy Oil Corporation price-eps-surprise | Murphy Oil Corporation Quote
On a more optimistic note, Permian Resources Corporation PR is slated to report quarterly earnings after the market opens. The chances of the company delivering an earnings beat this time around are high, as it currently has an Earnings ESP of +3.51% and a Zacks Rank #3.
The Zacks Consensus Estimate for Permian Resources’ earnings is pegged at 27 cents per share, suggesting a 30.77% decrease from the prior-year reported figure. Looking at earnings surprises, Permian Resources’ earnings beat the Zacks Consensus Estimate in one of the last four quarters and missed thrice, delivering an average surprise of 4.76%.
This is depicted in the chart below:
Permian Resources Corporation price-eps-surprise | Permian Resources Corporation Quote
Lastly, USA Compression Partners USAC is slated to report quarterly earnings before the market opens. The chances of a Dallas, TX-based oil and gas equipment and services company delivering an earnings beat this time around are low, as it has an Earnings ESP of 0.00% and a Zacks Rank #3 at present.
The Zacks Consensus Estimate for USA Compression Partners’ earnings is pegged at 21 cents per share, indicating results in line with the figure reported in the prior year. In the past four quarters, USA Compression Partners beat the Zacks Consensus Estimate three times but missed once, resulting in an average negative earnings surprise of 15.11%.
This is depicted in the chart below:
USA Compression Partners, LP price-eps-surprise | USA Compression Partners, LP Quote
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This article originally published on Zacks Investment Research (zacks.com).
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