Can Diamondback Energy Pull Off a Strong Show in Q1 Earnings?

Diamondback Energy FANG is set to release first-quarter 2025 results on May 5. The current Zacks Consensus Estimate for the to-be-reported quarter is a profit of $4 per share on revenues of $3.7 billion.

Let’s delve into the factors that might have influenced the Permian-focused oil and gas producer’s performance in the March quarter. But it’s worth taking a look at FANG’s previous-quarter performance first.

Highlights of Q4 Earnings & Surprise History

In the last reported quarter, this Midland, TX-based upstream player beat the consensus mark on strong production and lower costs. Diamondback had reported adjusted earnings per share of $3.64 in the fourth quarter, ahead of the Zacks Consensus Estimate of $3.26. Revenues of $3.7 billion also went past the Zacks Consensus Estimate by 9.2%.

FANG beat the Zacks Consensus Estimate in three of the last four quarters and missed in the other. This is depicted in the graph below:
 

Diamondback Energy, Inc. Price and EPS Surprise

Diamondback Energy, Inc. price-eps-surprise | Diamondback Energy, Inc. Quote

Trend in Estimate Revision

The Zacks Consensus Estimate for the first-quarter bottom line has been revised 1.3% upward in the past seven days. The estimated figure indicates an 11.1% decline year over year. The Zacks Consensus Estimate for revenues, however, suggests a 68.2% increase from the year-ago period.

Factors to Consider

Diamondback is sitting on about 476,000 net acres in the Delaware and Midland regions, with more than 8,000 drilling locations and production of more than 450,000 barrels of oil equivalent per day. Overall, the wells drilled by the company have extremely low oil price breakeven costs and need the commodity to be at just $40 a barrel to be profitable.

In particular, Diamondback’s $26 billion Endeavor Energy acquisition significantly strengthens its Permian Basin position. The deal provides access to high-quality acreage with lower production costs.

Following the deal, Diamondback Energy is expected to have benefited from higher production during the first quarter. The company continues to churn out impressive volumes from its wide inventory of drill-ready locations in the Permian Basin — America's hottest and lowest-cost shale region. Consequently, our expectation for FANG’s average first-quarter volume is pegged at 850,688.7 barrels of oil equivalent per day (BOE/d), up 84.5% from the year-ago quarter’s level of 461,110 BOE/d.

Why a Likely Positive Surprise?

Our proven model predicts an earnings beat for Diamondback Energy this season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy), or 3 (Hold) increases the odds of an earnings beat.

You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

FANG has an Earnings ESP of +1.76% and a Zacks Rank #3.

(See the Zacks Earnings Calendar to stay ahead of market-making news.)

Other Stocks to Consider

Diamondback Energy is not the only company looking up this earnings cycle. Here are some other energy firms that you may want to consider on the basis of our model:

Coterra Energy CTRA has an Earnings ESP of +2.84% and a Zacks Rank #3. The firm is scheduled to release earnings on May 5.

You can see the complete list of today’s Zacks #1 Rank stocks here.

Notably, the Zacks Consensus Estimate for Coterra Energy’s 2025 earnings per share indicates 70.2% year-over-year growth. Valued at around $19.7 billion, Coterra Energy has lost 5.3% in a year.

ConocoPhillips COP has an Earnings ESP of +1.87% and a Zacks Rank #3. The firm is scheduled to release earnings on May 8.

ConocoPhiillps beat the Zacks Consensus Estimate for earnings in three of the last four quarters and missed in the other, with the average being 2.1%. Valued at around $117.5 billion, ConocoPhillips has lost 26.1% in a year.

Helmerich & Payne HP has an Earnings ESP of +14.61% and a Zacks Rank #3. The firm is scheduled to release earnings on May 7.

Helmerich & Payne beat the Zacks Consensus Estimate for earnings in three of the last four quarters and missed in the other, with the average being 4.9%. Valued at around $2 billion, Helmerich & Payne is down 48.1% in a year.

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This article originally published on Zacks Investment Research (zacks.com).

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