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ConocoPhillips (NYSE:COP) has been a core holding in the income portion of my portfolio for over a year. The company split off its refinery business, Phillips 66 (NYSE:PSX), earlier in the year and just reported its first full quarter as a pure play E&P concern. Results were very encouraging and bode well for the company performing as a standalone high yield energy concern going forward.

Key earnings highlights:

  • Excluding items, the company produced $1.44 a share in earnings for the quarter, 25 cents above consensus estimates.
  • Production was 50,000 Barrels/D above the low end estimates.
  • Output in the quarter from its Bakken and Eagle Ford shale projects in North America doubled from a year earlier.
  • The company expects fourth quarter production to be above third quarter production.

5 additional reasons COP is a good value buy at under $57 a share:

  1. The company has an A rated balance sheet, yields 4.7% and has raised its dividend payouts at an approximate 14% annual clip over the past five years.
  2. The stock is selling near the bottom of its five year valuation range based on P/E, P/B, P/S and P/CF.
  3. Consensus earnings estimates for FY2012 and FY2013 after falling for months, have risen over the past month. Look for this to continue based on today's earnings report. The company has now also beat earnings estimates four of the last five quarters.
  4. The stock goes for under 10x forward earnings and insiders have sold less than 1% of their overall shares in the prior six months.
  5. The stock has been in a slightly rising bottoming pattern since it spun out Phillips 66 and is now above its 100 day moving average (See Chart).

(click to enlarge)

Source: ConocoPhillips: A Solid Dividend And Value Play After Earnings