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Do analysts expect a rebound in energy earnings in 2015?

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By FactSet Insight  |  December 12, 2014

As the price of crude oil has continued to decline during the fourth quarter (to $59.95 yesterday from $91.16 on September 30), analysts have also continued to lower earnings estimates for companies in the Energy sector in the S&P 500 for the fourth quarter. The aggregate earnings estimate for the S&P 500 Energy sector for the fourth quarter has declined by 22% since September 30 (to $24.5 billion from $30.9 billion). Over this same time frame, the price of the Energy sector has dropped by 15.9% (to $555.82 from $661.05). This is the largest decline in price for all ten sectors during this period.

However, are analysts more optimistic about the prospects for earnings for the Energy sector beyond the fourth quarter? Have analysts increased or decreased earnings estimates for companies in this sector for 2015?

It appears analysts are as pessimistic on earnings for the Energy sector for 2015 as well, based on revisions to earnings estimates. The aggregate earnings estimate for the Energy sector for 2015 has also fallen by 22% since September 30 (to $103.7 billion from $133.1 billion). As a result, the Energy sector is now expected to report a year-over-year decline in earnings of 12%, compared to an expectation for growth of 8% in earnings back on September 30.

At the company level, 24 of the 43 companies (or 56%) in this sector have seen EPS estimates for 2015 cut by 20% or more to date, led by Murphy Oil (to $1.88 from $5.07), Marathon Oil Corporation (to $1.09 from $2.83), Apache Corporation (to $3.23 from $6.86), and Hess Corporation (to $2.48 from $5.20). However, the downward estimate revisions to estimates for Exxon Mobil (to $6.28 from $7.65) and Chevron (to $8.42 from $10.99) have been the largest contributors to the decrease in the earnings growth rate for the sector.

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Read more about earnings trends in this edition of FactSet Earnings Insight. Visit www.factset.com/earningsinsight to launch the latest report.  

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