Category: MTDR

MTDR – Here's Why Momentum Investors Will Love Matador Resources (MTDR)

Momentum investing is all about the idea of following a stock’s recent trend, which can be in either direction. In the ‘long’ context, investors will essentially be “buying high, but hoping to sell even higher.” And for investors following this methodology, taking advantage of trends in a stock’s price is key; once a stock establishes a course, it is more than likely to continue moving in that direction. The goal is that once a stock heads down a fixed path, it will lead to timely and profitable trades.

Even though momentum is a popular stock characteristic, it can be tough to define. Debate surrounding which are the best and worst metrics to focus on is lengthy, but the Zacks Momentum Style Score, part of the Zacks Style Scores, helps address this issue for us.

Below, we take a look at Matador Resources (MTDR Free Report) , a company that currently holds a Momentum Style Score of A. We also talk about price change and earnings estimate revisions, two of the main aspects of the Momentum Style Score.

It’s also important to note that Style Scores work as a complement to the Zacks Rank, our stock rating system that has an impressive track record of outperformance. Matador Resources currently has a Zacks Rank of #2 (Buy). Our research shows that stocks rated Zacks Rank #1 (Strong Buy) and #2 (Buy) and Style Scores of A or B outperform the market over the following one-month period.

You can see the current list of Zacks #1 Rank Stocks here >>>

Set to Beat the Market?

Let’s discuss some of the components of the Momentum Style Score for MTDR that show why this independent oil and gas company shows promise as a solid momentum pick.

A good momentum benchmark for a stock is to look at its short-term price activity, as this can reflect both current interest and if buyers or sellers currently have the upper hand. It’s also helpful to compare a security to its industry; this can show investors the best companies in a particular area.

For MTDR, shares are up 7.51% over the past week while the Zacks Oil and Gas – Exploration and Production – United States industry is up 3.54% over the same time period. Shares are looking quite well from a longer time frame too, as the monthly price change of 18.12% compares favorably with the industry’s 11.14% performance as well.

Considering longer term price metrics, like performance over the last three months or year, can be advantageous as well. Over the past quarter, shares of Matador Resources have risen 46.76%, and are up 288.37% in the last year. In comparison, the S&P 500 has only moved 8.79% and 34.24%, respectively.

Investors should also pay attention to MTDR’s average 20-day trading volume. Volume is a useful item in many ways, and the 20-day average establishes a good price-to-volume baseline; a rising stock with above average volume is generally a bullish sign, whereas a declining stock on above average volume is typically bearish. MTDR is currently averaging 1,255,970 shares for the last 20 days.

Earnings Outlook

The Zacks Momentum Style Score also takes into account trends in estimate revisions, in addition to price changes. Please note that estimate revision trends remain at the core of Zacks Rank as well. A nice path here can help show promise, and we have recently been seeing that with MTDR.

Over the past two months, 5 earnings estimates moved higher compared to none lower for the full year. These revisions helped boost MTDR’s consensus estimate, increasing from $2.30 to $2.87 in the past 60 days. Looking at the next fiscal year, 3 estimates have moved upwards while there have been 1 downward revision in the same time period.

Bottom Line

Taking into account all of these elements, it should come as no surprise that MTDR is a #2 (Buy) stock with a Momentum Score of A. If you’ve been searching for a fresh pick that’s set to rise in the near-term, make sure to keep Matador Resources on your short list.

MTDR – Matador Resources (MTDR) Q1 Earnings and Revenues Surpass Estimates

Matador Resources (MTDR Free Report) came out with quarterly earnings of $0.71 per share, beating the Zacks Consensus Estimate of $0.39 per share. This compares to earnings of $0.20 per share a year ago. These figures are adjusted for non-recurring items.

This quarterly report represents an earnings surprise of 82.05%. A quarter ago, it was expected that this independent oil and gas company would post earnings of $0.12 per share when it actually produced earnings of $0.27, delivering a surprise of 125%.

Over the last four quarters, the company has surpassed consensus EPS estimates four times.

Matador, which belongs to the Zacks Oil and Gas – Exploration and Production – United States industry, posted revenues of $266.85 million for the quarter ended March 2021, surpassing the Zacks Consensus Estimate by 0.09%. This compares to year-ago revenues of $371.59 million. The company has topped consensus revenue estimates two times over the last four quarters.

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

Matador shares have added about 106.4% since the beginning of the year versus the S&P 500’s gain of 11.5%.

What’s Next for Matador?

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

There are no easy answers to this key question, but one reliable measure that can help investors address this is the company’s earnings outlook. 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.

Ahead of this earnings release, the estimate revisions trend for Matador was favorable. While the magnitude and direction of estimate revisions could change following the company’s just-released earnings report, the current status translates into a Zacks Rank #2 (Buy) for the stock. So, the shares are expected to outperform 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 coming quarters and current fiscal year change in the days ahead. The current consensus EPS estimate is $0.59 on $324.96 million in revenues for the coming quarter and $2.47 on $1.25 billion in revenues for the current fiscal year.

Investors should be mindful of the fact that the outlook for the industry can have a material impact on the performance of the stock as well. In terms of the Zacks Industry Rank, Oil and Gas – Exploration and Production – United States is currently in the top 21% of the 250 plus Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1.