Energy Stocks to Watch Amid Q3 Earnings Despite Pricing Pressures

Core Insights - The third quarter of 2024 earnings results for oil and energy companies have shown better-than-expected outcomes despite declining commodity prices [1] - Several companies have surpassed earnings forecasts, leading to a more optimistic outlook for the sector [1] Commodity Price Impact - Oil prices in Q3 2024 declined compared to the previous year, with average monthly prices for West Texas Intermediate crude at $81.80, $76.68, and $70.24 per barrel in July, August, and September respectively, down from $76.07, $81.39, and $89.43 [2] - Natural gas prices also faced pressure, averaging $2.07, $1.98, and $2.28 per MMBtu in July, August, and September, down from $2.55, $2.58, and $2.64 in the same months last year [2] China's Economic Influence - China's economic slowdown has significantly contributed to the decline in oil prices, as it is the world's largest crude oil importer [3] - Weak economic indicators in China, including low inflation and sluggish consumer demand, have raised concerns about its oil consumption levels [3] Resilience of Energy Firms - Despite challenges, a notable percentage of energy firms have exceeded analyst expectations, with 48 S&P 500 members reporting a 5.2% year-over-year increase in total earnings and a 4.9% rise in revenues [4] - Approximately 81.3% of these firms have beaten EPS estimates, and 72.9% have surpassed revenue projections, indicating potential investment opportunities [4] Stocks with Earnings Beat Potential - Identifying stocks with the potential to outperform is crucial for investors, with a positive Earnings ESP and a Zacks Rank of 1, 2, or 3 increasing the likelihood of a positive earnings surprise [5] Promising Energy Stocks - ProPetro Holding Corp. (PUMP) has a Zacks Rank of 3 and an Earnings ESP of +60%, primarily operating in the Permian Basin [6] - Core Laboratories N.V. (CLB) holds a Zacks Rank of 3 with an Earnings ESP of +2.63%, providing reservoir management and production enhancement services [7] - Oceaneering International (OII) has an Earnings ESP of +2.27% and a Zacks Rank of 3, supplying offshore equipment and technology solutions [7] Conclusion - The Q3 2024 earnings season has revealed both challenges and opportunities for energy investors, with several companies demonstrating stronger-than-expected results [8] - Focusing on stocks with potential for positive earnings surprises, such as ProPetro Holding, Core Laboratories, and Oceaneering International, may allow investors to capitalize on post-earnings momentum [8]