Third-quarter earnings will be highly anticipated especially in the broader energy sector as crude oil prices soared during Q3 despite dipping in the last three trading sessions.

Crude oil prices are currently at around $88 a barrel and while some investors may have reluctance to buy into stocks of big oil conglomerates like Chevron CVX and Exxon Mobil XOM several smaller-cap energy players look poised for a strong rebound.

Two notable Zacks Oils and Energy sector stocks that stick out in this regard are Marathon Oil MRO and Viper Energy Partners VNOM with now looking like a good time to buy.

Performance Overview

While not held in the same regard as integrated oil giants Chevron and Exxon Mobil, Marathon Oil is still a leading oil and natural gas exploration and production company with operations in the United States and Africa.

Viper Energy is a variable distribution MLP and a subsidiary of Diamondback Energy FANG with their partnership having a mineral interest in oil-rich shale plays like the Eagle Ford and Permian Basin.

Year to date Marathon Oil and Viper Energy’s stock are down -4% and -9% respectively and have trailed many of their Zacks Oils and Energy sector peers. However, both stocks look poised for a sharp rebound considering their strengthening outlook amid higher oil prices.

Compelling Momentum

Investors should be on the lookout for energy companies with rising earnings estimates as Q3 results approach. This will largely correlate with energy stocks that could rip higher and have benefited from the surge in oil prices over the last quarter.

Considering this scenario, Marathon Oil and Viper Energy are very compelling. Notably, Marathon Oil’s fiscal 2023 earnings estimates have climbed 15% in the last 60 days with FY24 EPS estimates soaring 21%.

Pivoting to Viper Energy, in the last two months its FY23 and FY24 earnings estimates have skyrocketed 51% and 35% respectively.

Earnings ESP

Adding fuel to Marathon Oil and Viper Energy’s momentum is the Zacks Earnings ESP (Expected Surprise Prediction). Set to report their third-quarter earnings in early November, the Zacks ESP indicates Marathon Oil and Viper Energy could largely surpass expectations.

To that point, the Most Accurate Estimate for Marathon Oil’s Q3 EPS is currently at $0.79 per share and 25% above the Zacks Consensus of $0.63 a share.

Furthermore, the Zacks Consensus for Viper Energy’s Q3 EPS is at $0.38 a share with the Most Accurate Estimate at $0.41 per share and 10% above current expectations.

Bottom Line

Marathon Oil and Viper Energy may not be the typical names investors look to as it relates to oil and energy stocks but their annual earnings estimates have soared. This is an indication that these energy players are key beneficiaries of surging oil prices over the last quarter. At the moment Marathon Oil and Viper Energy’s stock both sport a Zacks Rank #2 (Buy) and an “A” Zacks Style Scores grade for Momentum.
Marathon Oil Corporation (MRO): Free Stock Analysis Report

Viper Energy Partners LP (VNOM): Free Stock Analysis Report

Chevron Corporation (CVX): Free Stock Analysis Report

Exxon Mobil Corporation (XOM): Free Stock Analysis Report

Diamondback Energy, Inc. (FANG): Free Stock Analysis Report

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