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Bear of the Day: Cimarex Energy (XEC)

Cimarex Energy (NYSE: XEC ) is an independent oil and gas exploration and production (E&P) company with operations in Oklahoma, Texas and New Mexico. The majority of their activity is currently in the Permian Basin and the Cana–Woodford shale play in western Oklahoma.

As with most E&Ps in the past two months, EPS estimates have come down sharply while the price of crude oil searches for a floor. But analysts have generally been late and slow to lower estimates.


And a second wave of downward revisions hit Cimarex last week, knocking XEC down into the Zacks #5 Rank cellar. Here are the EPS tables which tell the tale of lowered growth projections…

E&P Stocks May Have Bottomed Even If Oil Has Not

In a recent research report, JPMorgan energy analysts suggested that some E&P stocks were becoming bargains now, even if crude had lower to go. Their thesis is that it’s time to be a stock-picker in the industry while the winners get sorted out from the losers. Here’s what they had to say…

“In a rangebound energy tape, many stocks still can do very well, as happened during the nine-month period from September 2012 to June 2013. During this period, the group was down 3% but eight E&Ps that we follow were up 10% or more, with the best performing stock (COG) up 55%.”

These analysts are probably very right about being very selective in the E&P space. One of the strongest clues you can use is the Zacks Rank. When it turns back up from the cellar, you’ll know the analysts went to far and bargains are being sought.

According to, which measures analysts’ and bloggers’ success rate based on how their calls perform, blogger Zacks Investment Research has a total average return of 0.4% and a 53% success rate. Zacks Investment Research is Ranked #1771 out of 4019 Bloggers.

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