Exxon Mobil Stock Likely To Trade Lower Post Q4

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Exxon Mobil

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 fourth-quarter results on Tuesday, January 31. We expect Exxon Mobil stock to likely trade lower with revenue and earnings both missing market expectations marginally. Oil prices have cooled substantially since last summer when they surged into the triple digits following Russia’s invasion of Ukraine. It should be noted that higher natural gas prices in the third quarter helped offset weaker crude prices – helping Exxon to deliver record results in that period. However, gas prices have also come down from their recent peak. The company disclosed in an SEC filing that it expects to post a lower profit for Q4. The energy giant anticipates that lower oil and gas prices will negatively impact its income by $3.3 billion to $4.1 billion, compared with the third quarter.

Our forecast indicates that Exxon Mobil’s valuation is around $106 per share, which is 10% lower than the current market price. Look at our interactive dashboard analysis on Exxon Mobil Earnings Preview: What To Expect in Q4? for more details.

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(1) Revenues expected to be slightly below the consensus estimates

Trefis estimates Exxon Mobil’s Q4 2022 revenues to be around $92.3 Bil, slightly below the consensus estimate. Q3 revenues surged 52% year-over-year (y-o-y) to $112.1 billion from $73.8 billion in the year-ago quarter, driven by skyrocketing natural gas prices. Q3 production totaled 3.7 million barrels of oil equivalent (boe)/day, including a quarterly record from the Permian Basin of nearly 560K boe/day. To add to this, gas realizations increased 22% on European supply concerns and efforts to build inventory ahead of winter, more than offsetting the impact of decreasing crude realizations, which were down 12% on modest supply increases.

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 per day by the end of the decade. Exxon Mobil is also working hard to diversify into renewable energy with technologies like blue hydrogen and carbon capture. 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 Q4 2022 earnings per share (EPS) is expected to be $3.26 as per Trefis analysis, slightly below the consensus estimate of $3.31. It should be noted that XOM’s Q3 net income totaled a record of $19.66 billion, or $4.68/share, jumping 10% from the previous quarter’s $17.9 billion, which also set a record profit at the time. Earnings were driven by record refining volumes, strict cost controls, and higher natural gas prices.

(3) Stock price estimate lower than the current market price

Going by our XOM’s Valuation, with an EPS estimate of around $13.29 and a P/E multiple of around 8.0x in fiscal 2022, this translates into a price of nearly $106, which is almost 10% lower than the current market price.

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.

What if you’re looking for a more balanced portfolio instead? Our high-quality portfolio and multi-strategy portfolio have beaten the market consistently since the end of 2016.

Returns Jan 2023
MTD [1]
2023
YTD [1]
2017-23
Total [2]
 XOM Return 7% 7% 30%
 S&P 500 Return 6% 6% 81%
 Trefis Multi-Strategy Portfolio 10% 10% 246%

[1] Month-to-date and year-to-date as of 1/26/2023
[2] Cumulative total returns since the end of 2016

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