Questar Earnings Preview

Questar (NYSE: STR) hasn't been able to establish an earnings trend, bouncing between beating and falling short of estimates during the past fiscal year. The company will unveil its latest earnings Wednesday. Questar is a natural gas-focused energy company with five major lines of business: gas and oil exploration and production; midstream field services; energy marketing; interstate gas transportation; and retail gas distribution.

What analysts say:

• Buy, sell, or hold?: Analysts generally think investors should hang on to Questar, with half rating the stock a hold. Analysts like Questar better than competitor Southwestern Energy overall. Eight out of 24 analysts rate Southwestern Energy a buy compared with four of 10 for Questar. While analysts still rate the stock a hold, they are a little more optimistic about it compared with three months ago.
• Revenue forecasts: On average, analysts predict $209.4 million in revenue this quarter. That would represent a rise of 4.1% from the year-ago quarter.
• Wall Street earnings expectations: The average analyst estimate is earnings of $0.20 per share. Estimates range from $0.19 to $0.21.

What our community says:
CAPS All-Stars are solidly backing the stock, with 95.8% giving it an "outperform" rating. The community at large concurs with the All-Stars, with 94.7% awarding it a rating of "outperform." Fools are bullish on Questar, though the message boards have been quiet lately with only 83 posts in the past 30 days. Even with a robust four out of five stars, Questar's CAPS rating falls a little short of the community's upbeat outlook.

Management:
Questar's income has fallen year over year by an average of 39.4%. Revenue has fallen for the past three quarters. The company's gross margin shrank by 8.2 percentage points in the last quarter. Revenue fell 52.2% while cost of sales fell 44% to $261.3 million from a year earlier.

Now let's look at how efficient management is at running the business. Traditionally, margins represent the efficiency with which companies capture portions of sales dollars. The following table shows gross and net margins over the past four quarters.

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