These 2 Oils and Energy Stocks Could Beat Earnings: Why They Should Be on Your Radar

Zacks identifies positive Earnings ESPs for Diamondback Energy and Cheniere Energy ahead of their upcoming reports: FANG’s estimate is $5.09 per share versus a $4.71 consensus (+7.90%), while LNG’s is $5.34 versus $4.10 (+30.19%). Both carry Zacks Rank #3 (Hold), and the article says the figures may signal earnings surprises, not that results are assured. Zacks cites a historical 70% positive-surprise rate and 28.3% average annual returns for stocks meeting its positive-ESP and Rank #3-or-better criteria in a 10-year backtest.

Analysis

The signal is a revision screen, not an earnings-quality or return forecast. Near the releases, a positive EPS surprise may already be reflected in estimates; price response will depend more on guidance, cash generation and whether revisions persist. The promotional 70% hit rate and annualized backtest return are not a basis for sizing without methodology, transaction costs and out-of-sample performance. There is also a small arithmetic inconsistency between the quoted estimate pairs and ESP percentages; verify the live consensus and revision history before trading.

The two names have different transmission channels. For Diamondback Energy, test whether any beat is supported by realized prices, volumes and cost/capital discipline; an oil-price reversal can overwhelm a quarterly surprise and pressure producer valuations. For Cheniere Energy, focus on the outlook and cash-flow implications of volumes, contract terms and LNG-market conditions rather than treating EPS alone as evidence of durable upside. A beat without stronger forward indicators risks a sell-the-news reaction. Over 6–18 months, commodity and LNG-market fundamentals matter more than a one-quarter estimate gap. No clear cross-company pair trade follows from these signals alone.

Key Decisions for Investors

• Do not buy either stock solely on the ESP screen. Before the October 29 Cheniere and November 2 Diamondback reports, verify current estimate revisions, options-implied move and valuation; the supplied data do not establish whether a surprise is mispriced.
• Prefer a post-report entry: consider a small, defined-risk long only if the stock holds its initial reaction and management commentary supports forward cash flow or guidance. Abandon the setup if the report beats EPS but forward indicators weaken, or if the shares reverse below the post-earnings low.
• For Diamondback, monitor realized oil prices, production, unit costs, capital spending and any guidance change; for Cheniere, verify volume, contract and cash-flow commentary. These are the key checks that distinguish a durable revision from an EPS-only beat.
• Treat the signal as falsified if estimate revisions turn negative before release, the relevant commodity backdrop deteriorates materially, or either company cuts forward guidance. Avoid an options trade until implied volatility and the market-implied move are checked.