The Energy sector is poised to deliver one of its strongest performances in recent years during the third-quarter 2026 earnings season. Per the latest Earnings Trends report, the sector's earnings are projected to surge 133.9% year over year, marking the second-highest growth rate among the 16 Zacks sectors.
The anticipated improvement reflects a much stronger commodity-price environment, improved refining margins, disciplined spending and better operating conditions across several parts of the energy industry.
Based on our exclusive research and unique market insight, we present four stocks — ConocoPhillips COP, EOG Resources, Inc. EOG, Targa Resources Corp. TRGP and Calumet, Inc. CLMT — to take advantage of the positive post-announcement price reaction.
Oil and Gas Price Movements in Q3
The third quarter of 2026 presented a challenging operating environment for the oil and energy sector, as shifting market dynamics and geopolitical developments influenced industry performance. Escalating unrest in the Middle East heightened concerns about energy supplies, while fluctuations in commodity markets created uncertainty for producers and refiners. Inflationary pressures, elevated borrowing costs, logistical bottlenecks and increasing operating expenses further complicated operations. Although higher crude realizations and improved refining margins provided some financial relief, rising transportation costs and an uncertain global demand outlook continued to challenge profitability across the sector.
Crude oil markets witnessed considerable strength throughout the third quarter, primarily driven by heightened supply risks and geopolitical developments. According to the U.S. Energy Information Administration (EIA), the average price of West Texas Intermediate (WTI) crude climbed from $80.46 per barrel in July to $83.90 in August before reaching $97.31 in September. The pronounced increase toward the end of the quarter reflected mounting concerns about potential disruptions to global oil flows. This pricing environment benefited exploration and production companies, creating opportunities for improved operating revenues, stronger margins and greater cash-flow generation.
In contrast, the natural gas market experienced relatively limited price appreciation, reflecting abundant domestic supplies. EIA figures indicate that Henry Hub spot prices averaged $2.89 per million British thermal units (MMBtu) in July before easing to $2.78 in August and subsequently improving to $2.95 in September. Elevated U.S. natural gas output, comfortable storage levels and greater electricity generation from renewable sources kept prices in check, despite seasonal demand from power producers. Consequently, the quarter was characterized by a widening contrast between strengthening crude oil fundamentals and a natural gas market constrained by persistent supply abundance.
Earnings Season Is Off to a Strong Start
The Oil/Energy sector is poised for robust earnings expansion in the third quarter of 2026. 40% of the sector’s companies have already announced their results, and their earnings have surged 202.1% year over year, accompanied by a 38.9% increase in revenues. Every company reporting so far has surpassed earnings expectations, while 80% have delivered positive revenue surprises. Overall, the sector is projected to post earnings of approximately $65.6 billion on revenues of $410.2 billion for the quarter.
The sector is also playing a pivotal role in driving S&P 500 earnings growth. While the broader index is expected to register 26.5% earnings growth, the figure falls to 21.6% without the Energy sector’s contribution.
How to Identify Potential Outperformers?
With several energy firms thronging the investment space, it is by no means an easy task for investors to arrive at stocks that have the potential to deliver better-than-expected earnings. While it is impossible to be sure about such outperformers, our proprietary methodology makes it fairly simple.
Our research shows that for stocks with the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold), the chance of a positive earnings surprise is as high as 70%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Earnings ESP is our proprietary methodology for determining stocks that have the best chances to surprise with their next earnings announcement. It is the percentage difference between the Most Accurate Estimate and the Zacks Consensus Estimate.
Our Choices
One might start with ConocoPhillips, which is primarily involved in the exploration and production of oil and natural gas.
COP, with an Earnings ESP of +3.74% and a Zacks Rank #1, is scheduled to release third-quarter earnings on Nov. 5. ConocoPhillips beat the Zacks Consensus Estimate in three of the last four quarters and missed in one.
ConocoPhillips Price and EPS Surprise
ConocoPhillips price-eps-surprise | ConocoPhillips Quote
You can see the complete list of today’s Zacks #1 Rank stocks here.
EOG Resources also deserves mention. The company has a Zacks Rank of 2 and an Earnings ESP of +0.79% at present. EOG Resourcesis an independent exploration and production company focused on crude oil, natural gas liquids and natural gas.
EOG beat earnings estimates in each of the trailing four quarters. EOG Resources is set to release results on Nov. 5.
EOG Resources, Inc. Price and EPS Surprise
EOG Resources, Inc. price-eps-surprise | EOG Resources, Inc. Quote
You may consider Targa Resources, too, which currently carries a Zacks Rank #3 and an Earnings ESP of +2.05%. The Houston, TX-based company is a premier energy infrastructure company and a leading provider of integrated midstream services in North America.
TRGP is scheduled to release earnings on Nov. 5. It beat the Zacks Consensus Estimate for earnings twice in the last four quarters and missed in the remaining two.
Targa Resources, Inc. Price and EPS Surprise
Targa Resources, Inc. price-eps-surprise | Targa Resources, Inc. Quote
Finally, we have Calumet, which manufactures, formulates and markets a diversified slate of specialty branded products and renewable fuels to customers across a broad range of consumer-facing and industrial markets.
Calumet, with an Earnings ESP of +48.76% and a Zacks Rank #2, is scheduled to release earnings on Nov. 6. CLMT surpassed earnings estimates in three of the trailing four quarters, missing in one.
Calumet, Inc. Price and EPS Surprise
Calumet, Inc. price-eps-surprise | Calumet, Inc. Quote
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ConocoPhillips (COP): Free Stock Analysis Report
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This article originally published on Zacks Investment Research (zacks.com).