Hess Outperforms Industry in 6 Months: Should You Buy the Stock?

Shares of Hess Corporation HES have gained 13% in the past six months, outperforming the oil-energy sector and the Zacks S&P 500 composite’s growth of 4.7% and 1.5%, respectively. The company has a market capitalization of $44 billion.Hess has outperformed some other operators in this space. In the past six months, another operator in the same industry Murphy Oil Corporation MUR has declined 10%, while ExxonMobil Corporation XOM has gained 8%. Image Source: Zacks Investment Research Hess is trading above its 50-day simple moving average (SMA), signaling a bullish trend.HES’s 50-Day SMA Image Source: Zacks Investment Research The 50-day SMA is a key indicator for traders and analysts to identify support and resistance levels. It is considered particularly important as it is the first marker of a stock’s uptrend or downtrend.Is it wise to add the HES stock to your portfolio solely based on recent positive price momentum? Let us explore this further by examining the key factors that can help investors determine whether now is an opportune time to invest in Hess.Factors to ConsiderHES’ Yellowtail project, the fourth and largest development on the Stabroek Block, remains on track for startup in the third quarter of 2025. The project will utilize the ONE GUYANA FPSO and is expected to have an initial gross production capacity of 250,000 barrels of oil per day. This milestone demonstrates the continued success and strategic importance of Hess’s offshore operations in Guyana.The most immediate and major driver of investment appeal is Hess’s disciplined control over its cost structure, which helped deliver stronger sequential performance in its exploration and production (E&P) segment. Adjusted net income for E&P rose 6.4% sequentially to $563 million in the first quarter of 2025 despite lower oil prices and reduced sales volumes.The above-mentioned improvement was largely due to declines in cash operating costs, exploration expenses and DD&A expenses (depreciation, depletion and amortization). Specifically, Hess reported cash costs of $12.27 per barrel of oil equivalent (Boe) and DD&A of $13.25/Boe, both within manageable and guided ranges. These cost efficiencies demonstrate operational resilience and reinforce the company's ability to generate stable earnings in fluctuating market environments.Another key aspect is Hess's targeted capital investment strategy, with a strong emphasis on high-return assets, especially offshore Guyana. Capital and exploratory expenditure increased to $1.09 billion in the first quarter of 2025 from $927 million a year earlier, with more than half of that directed toward Guyana. Investments in major developments like Uaru, Yellowtail and Whiptail are expected to deliver substantial long-term production and cash flow growth.Target Price Indicates UpsideBased on short-term price targets offered by 15 analysts, the Zacks average price target is $160.97 per share. The average indicates a 13.56% upside from the last closing price. Image Source: Zacks Investment Research Impressive Earnings Surprise History of HESHess’s bottom line surpassed earnings estimates in the last four quarters, the average being 9.58%.RisksDespite the favorable investment outlook for Hess, one notable risk that investors should consider is its exposure to commodity price volatility, particularly in the E&P segment. In first-quarter 2025, the company experienced a significant year-over-year decline in E&P adjusted net income, dropping from $997 million in first-quarter 2024 to $563 million. This reduction was primarily attributed to lower realized oil prices and decreased sales volumes, which underscores the sensitivity of Hess’s earnings to external market conditions.Although the company partially mitigates this risk through cost discipline and diversified assets, including stable midstream cash flows, the core business remains heavily dependent on global crude pricing. Any sustained downturn in oil markets, whether due to macroeconomic slowdowns, OPEC+ policy shifts, or geopolitical disruptions, can materially impact cash flows, capital returns and valuation.Underlifted sales volumes, such as 1.3 million barrels in first-quarter 2025, though recoverable, add another layer of earnings variability when combined with price fluctuations. This reliance on commodity cycles remains an inherent and non-trivial risk to the investment thesis. Hence, it is better to stay cautious about this Zacks Rank #3 (Hold) stock. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.5 Stocks Set to DoubleEach was handpicked by a Zacks expert as the #1 favorite stock to gain +100% or more in the coming year. While not all picks can be winners, previous recommendations have soared +112%, +171%, +209% and +232%.Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.Today, See These 5 Potential Home Runs >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Exxon Mobil Corporation (XOM): Free Stock Analysis Report Hess Corporation (HES): Free Stock Analysis Report Murphy Oil Corporation (MUR): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks