Exxon Mobil Corporation (XOM) is gearing up to release its fourth-quarter financial results on January 31, 2025, before the market opens, amid some turbulent market conditions. Analysts are anticipating significant impacts on its earnings due to recent market trends, particularly the decline in oil prices and narrowed refining margins.
The Zacks Consensus Estimate for Exxon Mobil's fourth-quarter earnings is currently pegged at $1.58 per share, reflecting a remarkable drop of 36.3% compared to the earnings reported for the same period last year. This projection marks one of the steepest declines the company has seen, and it has prompted analysts to reassess their outlooks for the corporation moving forward. Notably, six analysts revised their estimates downwards over the past 30 days, indicating increasing caution surrounding the oil giant's upcoming report.
According to the same analysts, Exxon’s estimated revenues for the fourth quarter are expected to be approximately $87.1 billion, which showcases a slight increase of 3.3% from last year’s results. The company’s previous performance over the trailing four quarters included exceeding consensus earnings estimates three times and missing once, with an average earnings surprise of 2.9%. Unfortunately, it appears Exxon may not replicate this trend this quarter as it currently holds a Zacks Rank of #3, which traditionally suggests neither strong buy nor strong sell sentiment.
One of the major influences on the anticipated poorer performance stems from the reported decline of crude oil prices, which are significant for Exxon’s upstream operations. The current projections indicate potential reductions of quarterly earnings between $0.5 billion to $0.9 billion because of weakened oil prices, according to Exxon’s recent Form 8-K filing. A comparative review of monthly average WTI (West Texas Intermediate) spot prices over the last quarter reveals figures of $71.99, $69.95, and $70.12 per barrel, respectively for October, November, and December, which are significantly lower than prices during the same months last year.
Exxon is also facing challenges from lower refining margins, which are expected to constrain earnings from its Energy Products segment by as much as $0.3 billion to $0.7 billion, again when compared to the prior quarter. This dual-hit from both falling oil prices and reduced refining margins paints a concerning picture for Exxon’s financial health and impacts investor sentiment as they await the numbers.
Over the past year, Exxon’s stock has soared by nearly 9.3%, outpacing its industry competitors like BP plc, which saw declines of 6.4%, and Chevron Corporation, which rose only modestly at 10.1%. Despite the overall increase, Exxon's current stock performance is being regarded as relatively overvalued. Its trailing enterprise value/earnings before interest, tax, depreciation and amortization (EV/EBITDA) ratio stands at 6.43, above the industry average of 4.05, which raises concerns among cautious investors.
Interestingly, some analysts seem to maintain faith in Exxon’s potential for recovery. For example, Devin McDermott of Morgan Stanley recently raised the company's price target to $141 from $140, indicating optimism about Exxon's recovery prospects. Meanwhile, Truist also elevated its price target to $119, reflecting anticipation of stronger oil and natural gas prices bolstering earnings for 2025. According to TipRanks analysis, the consensus rating surrounding Exxon Mobil stock remains categorized as Moderate Buy, supported by numerous buy recommendations amid analysts’ concerns about the company’s vulnerability to macroeconomic changes.
This mixed sentiment is mirrored among options traders, who predict volatility surrounding the stock post-earnings announcement. Options analysis suggests expectations for about a 2.64% move in either direction after the report, indicative of the uncertain market environment surrounding Exxon's forthcoming financial disclosures.
Exxon Mobil is set for its earnings call on January 31 at 8:30 AM CST, which presents investors and analysts with the opportunity to glean insights from the company’s leadership about its tabled returns and plans moving forward. Considering the expected earnings drop and the subsequent market reactions, it will be imperative for investors to remain vigilant. Analysts suggest they should monitor for any breakout above current resistance levels, which could signal renewed bullish momentum.
With varying perspectives and cautious analyses, Exxon Mobil’s forthcoming earnings report could play a pivotal role in defining the stock's performance for the coming months and determining whether it can recover from its recent bearish trend. Investors will be closely watching not just the earnings results, but also the projected guidance for future quarters, which could either instill confidence or deepen concerns surrounding Exxon, depending on market reactions.