Matador (MTDR) Soars 6.8%: Is Further Upside Left in the Stock?

·2 min read

Matador Resources (MTDR) shares ended the last trading session 6.8% higher at $30.82. The jump came on an impressive volume with a higher-than-average number of shares changing hands in the session. This compares to the stock's 5.3% gain over the past four weeks.

Increased optimism over the accelerated recovery in the energy sector following the massive oil price improvement primarily drove the stock. With a strong footprint in the liquid-rich Delaware Basin’s Wolfcamp and Bone Spring plays, the company is well positioned to capitalize on the rapidly improving oil price. The company has been ramping up production in the basin and has produced record daily barrels of oil equivalent volumes from Delaware in the recently concluded June quarter. By this year’s end, the company is expecting to have 34 gross operated wells in progress in the Delaware Basin. On Sep 15, JP Morgan analyst Arun Jayaram raised the stock’s price target, reflecting rising optimism over the stock’s overall performance.

Price and Consensus

Price Consensus Chart for MTDR
Price Consensus Chart for MTDR

This independent oil and gas company is expected to post quarterly earnings of $0.96 per share in its upcoming report, which represents a year-over-year change of +860%. Revenues are expected to be $375 million, up 84.4% from the year-ago quarter.

While earnings and revenue growth expectations are important in evaluating the potential strength in a stock, empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock price movements.

For Matador, the consensus EPS estimate for the quarter has been revised 4.4% higher over the last 30 days to the current level. And a positive trend in earnings estimate revision usually translates into price appreciation. So, make sure to keep an eye on MTDR going forward to see if this recent jump can turn into more strength down the road.

The stock currently carries a Zacks Rank 1 (Strong Buy). You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>>

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