Range Resources is Tuesday's IBD Stock Of The Day, as the natural gas producer rebounded off its 50-day moving average early in the day's market trading, presenting investors with a potential early entry.
U.S. natural gas futures increased 3.2% Tuesday. Prices have retreated somewhat from late July when it briefly hit a 14-year high of $9.70 per MMBtu (million British thermal units). However, strong demand in Europe has continued to support U.S. natural gas prices and stocks.
Fort Worth, Texas-based Range Resources is one of the biggest U.S. natural gas producers. It primarily operates in Pennsylvania with projects in the Marcellus, Utica and Upper Devonian shale formations. Marcellus Shale is largest natural gas field in the country. Recent federal assessments of the total reserves estimate it contains 609-998 trillion cubic feet of natural gas. This makes the Marcellus Shale just a little smaller than the largest gas field in the world which is situated in Qatar and Iran.
"We believe Appalachian natural gas is essential in meeting increased global demand in order for the U.S. to sustainably produce enough natural gas at affordable prices," CEO Jeff Ventura said during the second quarter earnings call in late July.
Range Resources Earnings
In the second quarter, RRC beat Wall Street predictions, reporting earnings per share ballooning 429% to $1.29. Revenue also increased 131% to $1.06 billion.
While many oil and gas companies have reported increased profits in 2022, inflation and supply chain constraints have brought along increased capital spending.
Range Resources' Q2 capital spending was $127 million, approximately 27% of the 2022 budget. Total capital expenditures in 2022 have been $244 million. The company expects capital spending to decline in second half of 2022 and maintains its full-fiscal year capital spending guidance of $460 million-$480 million.
"Our focus has been and is maintenance capital," Ventura told investors. "If and when we grow, most likely it will be low single digits."
RRC Stock Analysis
Range Resources stock increased 6.9% to 32.17 during Tuesday's market trading. This offers an aggressive entry as the stock is advancing off the 50-day average and is breaking a downtrend within the handle. The stock is currently in a cup-with-handle pattern with an official 34.10 buy point, according to MarketSmith analysis.
RRC stock was added to SwingTrader on Tuesday.
In early March, Range Resources stock broke above a 26.58 buy point from an 18-week cup base dating back to late October. The stock advanced to 34.61 on April 18, well above its 50-day moving average, but then began to retreat. RRC fell below its 50-day line on May 9.
RRC ranks seventh in the oil & natural gas stocks in U.S. exploration and production industry group. The stock has a strong Composite Rating of 98. It has a 97 Relative Strength Rating, an exclusive IBD Stock Checkup gauge for share price movement with a 1 to 99 score. The rating shows how a stock's performance over the last 52 weeks holds up against all other stocks in IBD's database. Its EPS rating is 81.
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