Talos Energy (TALO) Reports Second Quarter Loss, Top Revenue Estimates

Talos Energy (TALO) came out with quarterly loss of $0.01 per share versus the Zacks Consensus Estimate of $0.12. For comparison, a year ago the loss was $0.45 per share. These numbers have been adjusted for one-off items.

This quarterly report represents an earnings surprise of -108.33%. A quarter ago, it was expected that this independent oil and gas company would post a loss of $0.17 per share when it actually produced a loss of $0.34, delivering a surprise of -100%.

The company has failed to beat consensus EPS estimates over the last four quarters.

Talos Energy, a stock that belongs to the Zacks Oil and Gas – Exploration and Production – United States industry, posted revenues of $303.77 million for the quarter ended June 2021, surpassing the Zacks Consensus Estimate by 17.77%. For comparison, revenues from the previous year amounted to $88.87 million. The company has topped consensus revenue estimates twice over the last four quarters.

The sustainability of the immediate share price movement based on the recently-released numbers and future earnings expectations will largely depend on management’s commentary on the earnings call.

Talos Energy shares are up about 36.3% year-to-date compared to the S&P 500’s gain of 16.8%.

What’s next for Talos Energy?

While Talos Energy has outperformed the market this year, the question that comes to investors’ minds is: what’s next for the stock?

There are no simple answers to this key question, but one reliable measure that can help investors address this issue is the company’s earnings prospects. Not only does this include current consensus earnings expectations for the coming quarter(s), but also how these expectations have changed lately.

Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. Investors can track such revisions by themselves or rely on a tried-and-tested rating tool like the Zacks Rank, which has an impressive track record of harnessing the power of earnings estimate revisions.

Prior to the earnings release, Talos Energy’s estimate revision trend was mixed. While the magnitude and direction of estimate revisions may change following the company’s just-released earnings report, the current status translates into a Zacks Rank #3 (Hold) stock. Therefore, the company’s stock is expected to perform in line with the market in the near future. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

It will be interesting to see how estimates for the next quarters and the current fiscal year change in the coming days. The current consensus EPS estimate is $0.16 on revenue of $273.34 million for the coming quarter and $0.10 on revenue of $1.03 billion for the current fiscal year.

Investors should be aware that the outlook for the industry may also have a significant impact on share prices. In terms of the Zacks Industry Rank, Oil & Gas – Exploration & Production – United States is currently in the top 8% of over 250 Zacks industries. Our research shows that the top 50% of Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1.

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