How the Wheels Came Off Concho Resources' Bus

Seth Jayson, The Motley Fool
Updated

Concho Resources (NYS: CXO) reported earnings on Aug. 6. Here are the numbers you need to know.

The 10-second takeaway
For the quarter ended June 30 (Q2), Concho Resources missed estimates on revenues and whiffed on earnings per share.

Compared to the prior-year quarter, revenue contracted and GAAP earnings per share increased significantly.


Gross margins dropped, operating margins expanded, net margins increased.

Revenue details
Concho Resources booked revenue of $432.8 million. The 10 analysts polled by S&P Capital IQ foresaw a top line of $466.3 million on the same basis. GAAP reported sales were 3.0% lower than the prior-year quarter's $446.2 million.

Source: S&P Capital IQ. Quarterly periods. Dollar amounts in millions. Non-GAAP figures may vary to maintain comparability with estimates.

EPS details
EPS came in at $0.78. The 19 earnings estimates compiled by S&P Capital IQ predicted $1.00 per share. GAAP EPS of $3.07 for Q2 were 37% higher than the prior-year quarter's $2.24 per share.

Source: S&P Capital IQ. Quarterly periods. Non-GAAP figures may vary to maintain comparability with estimates.

Margin details
For the quarter, gross margin was 79.7%, 530 basis points worse than the prior-year quarter. Operating margin was 129.2%, 3,980 basis points better than the prior-year quarter. Net margin was 73.8%, 2,180 basis points better than the prior-year quarter.

Looking ahead
Next quarter's average estimate for revenue is $524.3 million. On the bottom line, the average EPS estimate is $1.12.

Next year's average estimate for revenue is $2.04 billion. The average EPS estimate is $4.43.

Investor sentiment
The stock has a three-star rating (out of five) at Motley Fool CAPS, with 241 members out of 258 rating the stock outperform, and 17 members rating it underperform. Among 50 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 46 give Concho Resources a green thumbs-up, and four give it a red thumbs-down.

Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on Concho Resources is outperform, with an average price target of $124.56.

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The article How the Wheels Came Off Concho Resources' Bus originally appeared on Fool.com.

Seth Jayson had no position in any company mentioned here at the time of publication. You can view his stock holdings here. He is co-advisor ofMotley Fool Hidden Gems, which provides new small-cap ideas every month, backed by a real-money portfolio. The Motley Fool has no positions in the stocks mentioned above. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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