ExxonMobil (XOM) to Report Q4 Earnings: What's in Store?

Exxon Mobil Corporation XOM is set to report fourth-quarter 2019 results on Jan 31, before the opening bell.

In the last reported quarter, the company came up with earnings of 68 cents per share that beat the Zacks Consensus Estimate of 64 cents on the back of ramped-up liquid volumes in the prolific Permian Basin.

Notably, ExxonMobil beat earnings estimates thrice in the last four reported quarters, delivering an average positive surprise of 7.5%, as shown in the chart below.

Exxon Mobil Corporation Price and EPS Surprise

Exxon Mobil Corporation Price and EPS Surprise

Exxon Mobil Corporation price-eps-surprise | Exxon Mobil Corporation Quote

Let’s see how things have shaped up prior to the announcement.

Trend in Estimate Revision

The Zacks Consensus Estimate for fourth-quarter earnings of 47 cents has seen no upward revision and five downward movements in the past 30 days. The figure suggests a year-over-year decline of 68.9%.

Further, the Zacks Consensus Estimate for revenues is pegged at $68.9 billion for the quarter, indicating a decline of 4.2% from the year-ago reported figure.

Factors to Consider

Ramped-up production from U.S. shale resources, especially in the Permian, and weak global crude demand are expected to have impacted commodity prices in the fourth quarter. Through the December quarter of 2019, price of West Texas Intermediate averaged $56.96 per barrel, lower than the year-ago level of $59.08. Similarly, Brent crude averaged $63.41 per barrel, lower than the year-ago quarter’s $67.71. The drop in oil prices is likely to have clipped ExxonMobil’s fourth-quarter 2019 profit from upstream operations.

Notably, the latest SEC filing revealed that the company expects operating profits from upstream activities to reach $2.3 billion in fourth-quarter 2019, indicating a decline from the year-ago level of $3.7 billion. This price drop might have been partially offset by higher production. The Zacks Consensus Estimate for fourth-quarter production is pegged at 4,044 thousand barrels of oil equivalent per day (MBoe/d), suggesting an improvement from the year-ago period’s 4,010 MBoe/d.

The recent regulatory filing also reflected the company’s decline in profits from the chemicals business. It is expected to have taken a hit from a global glut in polyethylene. The segment is expected to record a $100-$300 million loss. The year-ago profit came in at $744 million.

Similarly, the downstream business — which generated $1.2 billion in profits in third-quarter 2019 — is expected to take a $800-$600 million hit in the fourth quarter. The segment might have been affected by continued pressure on refining margins and the impact of derivatives on diesel, gasoline, and other products. Comparably, the Downstream segment had generated profit of $2.7 billion in fourth-quarter 2018.

Earnings Whispers

Our proven model does not conclusively predict an earnings beat for ExxonMobil this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. That is not the case here as you will see below.

Earnings ESP: The company’s Earnings ESP is -0.85%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: ExxonMobil currently carries a Zacks Rank #3.

Recent News Update

ExxonMobil made another huge oil discovery in the Stabroek Block, located offshore Guyana. The company announced the new hydrocarbon discovery at the Uaru exploration well, located 16 kilometres northeast of the Liza field.

The latest discovery marks the 16th one in the Stabroek Block. The largest publicly-traded energy mammoth has increased reserve estimates in the block to more than 8 billion Boe. Notably, ExxonMobil considers deepwater Guyana and the booming Permian Basin as major growth drivers.

Stocks That Warrant a Look

Though an earnings beat looks uncertain for ExxonMobil, here are a few firms that you may want to consider on the basis of our model. These have the right combination of elements to post an earnings beat in the upcoming quarterly reports:

Enbridge Inc. ENB has an Earnings ESP of +3.66% and carries a Zacks Rank #2. The company is scheduled to release quarterly earnings on Feb 14. You can see the complete list of today’s Zacks #1 Rank stocks here.

NGL Energy Partners LP NGL has an Earnings ESP of +36.84% and a Zacks Rank #1. The company is set to release quarterly earnings on Feb 6.

Antero Resources Corporation AR has an Earnings ESP of +6.02% and a Zacks Rank #3. The company is set to release quarterly earnings on Feb 12.

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