Exxon Mobil (NYSE: XOM) is set to announce its fiscal second-quarter results on August 2nd, with expectations of mixed results that could lead to the stock trading sideways. The company, a major player in the energy sector and North America’s largest by market cap, has seen its stock rise by 18% year-to-date to $119, outperforming its peer Chevron Corporation (NYSE: CVX) which grew 7% to $161 during the same period. In the previous quarter, Exxon Mobil’s earnings disappointed market expectations due to inventory and non-cash tax adjustments, although the company highlighted ongoing cost savings and a strengthened balance sheet.
Despite strong gains over the past few years, Exxon Mobil’s stock has experienced inconsistent performance, with returns of 48% in 2021, 80% in 2022, and -9% in 2023. In comparison, the S&P 500 saw returns of 27% in 2021, -19% in 2022, and 24% in 2023, indicating that XOM underperformed the index in 2023. Beating the S&P 500 has been challenging for individual stocks across various sectors, including energy giants like CVX, COP, and BP. However, the Trefis High Quality Portfolio has consistently outperformed the benchmark index, providing better returns with lower risk. As uncertainty looms in the macroeconomic environment, the question remains whether XOM will continue to underperform or see a significant jump in performance.
Trefis estimates Exxon Mobil’s Q2 2024 revenues to be around $89.5 billion, slightly below consensus estimates. In the previous quarter, XOM’s revenue fell 4% year-over-year to $83.1 billion, as oil refining margins and natural gas prices declined. Despite these challenges, the company offset some of the revenue decline with increased oil production in Guyana and record fuel production from its refineries. Exxon Mobil has several high-potential projects in its pipeline, including investments in Guyana and developments in renewable energy such as blue hydrogen and carbon capture technologies. The company expects carbon capture and storage to become a $4 trillion industry by 2050, highlighting its commitment to diversifying its energy portfolio.
In terms of earnings per share (EPS), Exxon Mobil is expected to marginally beat consensus estimates with a projected EPS of $2.05 for Q2 2024. In the previous quarter, the company’s net income declined to $8.22 billion, or $2.06 per share, compared to $11.43 billion, or $2.79 per share, in the year-ago period. Despite the drop in net income, this was Exxon Mobil’s second-highest Q1 earnings in the past decade. Based on Trefis’ analysis, the company’s valuation is around $112 per share, in line with the current market price. Exxon Mobil’s EPS estimate of around $8.49 and a P/E multiple of 13.2x in fiscal 2024 translate to a price of nearly $112, which is approximately 5% lower than the current market price.
As Exxon Mobil prepares to announce its Q2 results, investors will be closely watching for any updates on revenue performance, earnings, and future growth prospects. With the energy sector facing challenges from fluctuating oil prices and evolving market dynamics, Exxon Mobil’s strategic investments in high-potential projects and renewable energy technologies will be key factors in determining its long-term success. Stay tuned for the latest updates on Exxon Mobil’s earnings and market performance following the quarterly results announcement on August 2nd.
