Why Coterra Energy Stock Is a Buy Ahead of Its Q4 Earnings

Core Viewpoint - Coterra Energy is expected to report a decline in earnings and revenues for the fourth quarter of 2024, with strategic acquisitions and operational efficiencies positioning the company for long-term growth despite current challenges [1][2][8]. Financial Performance - The Zacks Consensus Estimate for Q4 2024 earnings per share (EPS) is 42 cents, reflecting a 19.2% decline year-over-year, while revenues are projected at $1.4 billion, indicating a 12.3$5.5 billion, down 7.4% year-over-year, and the EPS estimate is $1.60, representing a contraction of approximately 29.2$3.95 billion enhances its position in the Permian Basin, allowing for longer, more efficient wells and reduced costs [8]. - The strategic shift towards oil-rich assets in the Delaware Basin is expected to capitalize on robust oil prices, with oil volumes surpassing guidance in the previous quarter [9]. Market Performance - Coterra's stock has risen 16% over the past six months, outperforming the S&P 500's 10% gain and reflecting growing investor confidence due to strategic expansion and operational execution [11]. - The company has a Zacks Value Score of B, with competitive valuation metrics such as an EV/EBITDA ratio and a price/earnings ratio around 9X forward earnings [14]. Future Outlook - Coterra is positioned for long-term growth with strategic acquisitions and operational efficiency, generating over $1 billion in free cash flow recently and maintaining a low debt-to-capitalization ratio of 13.7% [16]. - The company has secured NGL export contracts to Europe and Asia from 2027 to 2038, providing revenue diversification and stability against domestic market fluctuations [16][17].