4 Energy Stocks That Could Surpass Q2 Earnings Estimates

Based on our exclusive research and unique market insight, we present four stocks — Calumet CLMT, Western Midstream Partners, LP WES, Helmerich & Payne HP and Transocean Ltd. RIG — to take advantage of the positive post-announcement price reaction.

Oil Prices Remained Well Above Year-Ago Levels

The second quarter was marked by considerable volatility in crude oil prices. According to data from the U.S. Energy Information Administration, the average monthly WTI crude price increased from $100.32 per barrel in April to $102.13 in May.

Prices then declined to $84.81 in June as some supply concerns eased. Despite the month-to-month pullback, WTI remained substantially above the corresponding 2025 levels of $63.54 in April, $62.17 in May and $68.17 in June.

The stronger year-over-year pricing backdrop likely supported revenues and cash flows for oil producers, drilling contractors and other companies tied to exploration and production activity.

Natural Gas Prices Strengthened Through the Quarter

Natural gas prices followed a steadier upward path. Henry Hub spot prices averaged $2.77 per MMBtu in April, increased to $2.94 in May and reached $3.15 in June.

This represented three consecutive months of improvement during the quarter. Higher power-sector consumption, LNG demand and tighter market conditions likely contributed to the upward movement.

The improving pricing environment may have benefited natural gas producers as well as midstream companies that transport, process and store the commodity.

Energy Earnings Growth Looks Exceptionally Strong

The combination of higher year-over-year oil prices and improving natural gas prices has created a favorable setting for the sector. Companies with strong operational execution, disciplined cost structures and exposure to improving industry activity could deliver particularly encouraging results.

However, a positive industry backdrop alone does not guarantee an earnings beat. Investors should also look for company-specific indicators that suggest reported results may exceed current expectations.

Earnings Season Is Off to a Strong Start

The Energy sector has made a solid start to the second-quarter earnings season. So far, companies representing 18.5% of the sector's market capitalization have reported results. Among them, 66.7% have exceeded earnings estimates, while an equal 66.7% have topped revenue expectations. The companies that have reported so far have also delivered 13.9% year-over-year earnings growth and 8.5% revenue growth, suggesting that the favorable commodity-price environment has translated into healthy operating performance.

This encouraging start comes against the backdrop of stronger oil and natural gas prices during the quarter and reinforces the view that companies with favorable earnings characteristics may have a higher probability of delivering positive surprises.

How to Identify Potential Outperformers?

With several energy firms thronging the investment space, it is by no means an easy task for investors to arrive at stocks that have the potential to deliver better-than-expected earnings. While it is impossible to be sure about such outperformers, our proprietary methodology makes it fairly simple.

Our research shows that for stocks with the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold), the chance of a positive earnings surprise is as high as 70%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Earnings ESP is our proprietary methodology for determining stocks that have the best chances to surprise with their next earnings announcement. It is the percentage difference between the Most Accurate Estimate and the Zacks Consensus Estimate.

Our Choices

One might start with Calumet, which produces specialty products and renewable fuels through an integrated platform serving varied industries.

CLMT, with an Earnings ESP of +169.57% and a Zacks Rank #2, is scheduled to release second-quarter earnings on Aug. 7. Calumet beat the Zacks Consensus Estimate in two of the last four quarters and missed in the other two.

You can see the complete list of today’s Zacks #1 Rank stocks here.

Western Midstream Partners also deserves mention. The partnership has a Zacks Rank of 2 and an Earnings ESP of +1.19%. Western Midstream Partners provides natural gas, crude oil, NGL and produced-water gathering, processing and transportation services across major U.S. basins.

WES beat earnings estimates twice in the last four quarters, met in one and missed in the other. Western Midstream Partners is set to release results on Aug. 5.

You may consider Helmerich & Payne, too, which is #3 Ranked, with an Earnings ESP of +2.08%. The Tulsa, OK-based company is engaged in the contract drilling of oil and gas wells in the United States and internationally.

HPis scheduled to release earnings on Aug. 5. It beat the Zacks Consensus Estimate for earnings once in the last four quarters but missed three times.

Finally, we have Transocean, the world’s largest offshore drilling contractor and leading provider of drilling management services.

Transocean, with an Earnings ESP of +38.89% and a Zacks Rank #3, is scheduled to release earnings on Aug. 5. RIG surpassed earnings estimates in two of the trailing four quarters but missed in the other two.

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This article originally published on Zacks Investment Research (zacks.com).

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