Range Resources (RRC) Update - July 20

[dan_s]

Range Resources (RRC) will be the first Sweet 16 company to report Q2 results on July 26. Antero Resources (AR) is the only other company in the portfolio that will report quarterly financial results next week. Both companies are heavily weighted to gas and NGLs produced from the Appalachian Basin (Marcellus & Utica Shales). They will give us a preview of what the others will report for natural gas and NGL prices.

RRC is trading this morning at $14.40. My current valuation is $24.50.
Range is one of the original Sweet 16, so I have been following it closely for close to 20 year and I have a HIGH level of confidence in my model.
It is one of four "gassers" in the Sweet 16. The others are AR, CRK and EQT.
Range's production mix is approximately 70% natural gas, 28% NGLs and just 2% crude oil. So, the drop in oil price has almost no impact on revenues.
Based on my forecast, Range should report operating cash flow of $206 million ($0.85 per share) for Q2.
It is on track to generate over $425 million of free cash flow from operations this year.
Range has ~70% of their 2021 natural gas production hedged with collars that have $2.79/MMBtu ceilings, so "Reported Net Income" will include a significant mark-to-market expense on those hedges. Ignore it and focus on "Adjusted Net Income", which I expect to be $75.7 million ($0.31/share). First Call's EPS estimate for Q2 is $0.26.

Zacks Equity Research
Mon, July 19, 2021

Wall Street expects a year-over-year increase in earnings on higher revenues when Range Resources (RRC) reports results for the quarter ended June 2021. While this widely-known consensus outlook is important in gauging the company's earnings picture, a powerful factor that could impact its near-term stock price is how the actual results compare to these estimates.

The earnings report, which is expected to be released on July 26, 2021, might help the stock move higher if these key numbers are better than expectations. On the other hand, if they miss, the stock may move lower.

While management's discussion of business conditions on the earnings call will mostly determine the sustainability of the immediate price change and future earnings expectations, it's worth having a handicapping insight into the odds of a positive EPS surprise.

Zacks Consensus Estimate

This independent oil and gas company is expected to post quarterly earnings of $0.24 per share in its upcoming report, which represents a year-over-year change of +340%.

Revenues are expected to be $598.15 million, up 58.9% from the year-ago quarter.

Estimate Revisions Trend

The consensus EPS estimate for the quarter has been revised 25% higher over the last 30 days to the current level. This is essentially a reflection of how the covering analysts have collectively reassessed their initial estimates over this period.

Investors should keep in mind that the direction of estimate revisions by each of the covering analysts may not always get reflected in the aggregate change.