Exxon Mobil (NYSE: XOM), a leading explorer, producer, transporter, and seller of crude oil and natural gas, and North America’s largest energy company by market cap, is scheduled to announce its fiscal first-quarter results on Friday, April 26. We expect Exxon Mobil stock to likely trade lower with revenue and earnings both missing market expectations marginally. In a company filing, Exxon mentioned that changes in gas prices could have a negative impact of $200 million-$600 million on upstream earnings in the upcoming Q1. It expects to report ~$2.7 billion in Q1 impairments related to its upstream business, and said changes in oil prices would knock as much as $400 million from upstream earnings in the quarter compared with Q4 2023’s $4.1 billion total. The company also reported a $500 million-$700 million increase in refining earnings would be more than offset by $900K-$1.3 billion in losses from timing effects primarily related to unsettled derivatives.
XOM stock has seen extremely strong gains of 200% from levels of $40 in early January 2021 to around $121 now, vs. an increase of about 35% for the S&P 500 over this roughly 3-year period. However, the increase in XOM stock has been far from consistent. Returns for the stock were 48% in 2021, 80% in 2022, and -9% in 2023. In comparison, returns for the S&P 500 have been 27% in 2021, -19% in 2022, and 24% in 2023 – indicating that XOM underperformed the S&P in 2023.
In fact, consistently beating the S&P 500 – in good times and bad – has been difficult over recent years for individual stocks; for other heavyweights in the Energy sector including CVX, COP, and BP, and even for the megacap stars GOOG, TSLA, and MSFT. In contrast, the Trefis High Quality Portfolio, with a collection of 30 stocks, has outperformed the S&P 500 each year over the same period. Why is that? As a group, HQ Portfolio stocks provided better returns with less risk versus the benchmark index; less of a roller-coaster ride as evident in HQ Portfolio performance metrics. Given the current uncertain macroeconomic environment with high oil prices and elevated interest rates, could XOM face a similar situation as it did in 2023 and underperform the S&P over the next 12 months – or will it see a strong jump?
Our forecast indicates that Exxon Mobil’s valuation is around $108 per share, which is 11% lower than the current market price. Look at our interactive dashboard analysis on Exxon Mobil Earnings Preview: What To Expect in Q1? for more details.
XOM Earnings Estimates For FY2024Q1
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(1) Revenues expected to be slightly below the consensus estimates
Trefis estimates Exxon Mobil’s Q1 2024 revenues to be around $71.7 Bil, slightly below the consensus estimate. In Q4, XOM’s revenue fell 12% year-over-year (y-o-y) to $84.3 billion, as upstream production was essentially flat and energy products sales declined marginally. XOM’s Q4 net production was roughly flat y-o-y at 3.8M boe/day, on favorable entitlement effects and growth in the Permian and Guyana. Exxon’s Permian production jumped 12% y-o-y in 2023. The company is expected to become the basin’s biggest producer once it completes its purchase of Pioneer Natural ResourcesPioneer Natural Resources
by mid-year 2024. Excluding Pioneer, Exxon plans a nearly 7% boost to 650K bbl/day in 2024. Exxon plans to aggressively ramp up production from the Permian Basin, a potential early sign that U.S. oil output may exceed expectations in 2024.
It should be noted that there are several high-potential projects from which XOM will benefit for many years to come. One of them is off the coast of Guyana, where Exxon Mobil recently began producing oil. It plans to invest between $20 billion and $25 billion annually in the country through 2027 and expects Guyana (which went from zero production three years ago to 360,000 barrels per day at present) to produce close to 1 million barrels per day by the end of the decade. Exxon also made a final investment decision to develop their fifth and most expensive project on Guyana’s offshore Stabroek block (targeted for the 2026 start). The $12.7 billion Uaru project will produce around 250K barrels/day and cost 27% more than the previous project of equivalent size, reflecting rising costs. The company is also working hard to diversify into renewable energy with blue hydrogen and carbon capture technologies. The company sees carbon capture and storage becoming a $4 trillion industry by 2050.
(2) EPS also likely to marginally miss the consensus estimates
Exxon Mobil’s Q1 2024 earnings per share is expected to be $2.05 as per Trefis analysis, marginally below the consensus estimate. In Q4, Exxon’s Q4 GAAP earnings fell to $7.63 billion, or $1.91/share, from $12.75 billion, or $3.09/share, in the year-earlier quarter.
(3) Stock price estimate lower than the current market price
Going by our XOM’s Valuation, with an EPS estimate of around $8.76 and a P/E multiple of around 12.3x in fiscal 2024, this translates into a price of nearly $108, which is almost 11% lower than the current market price. It should be noted that we use core sales revenue (which comes from the sale of hydrocarbons) figures that exclude the revenue it generates from the distribution, processing, and marketing of hydrocarbon and other sources of income.
It is helpful to see how its peers stack up. Exxon Mobil Peers shows how XOM stock compares against peers on metrics that matter. You will find other useful comparisons for companies across industries at Peer Comparisons.
XOM Return Compared With Trefis Reinforced Portfolio
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