Exxon Mobil shares likely to trade lower after Q4

Exxon Mobil (NYSE: XOM), a leading explorer, producer, transporter and marketer of crude oil and natural gas, and North America’s largest energy company by market capitalization, will report its fiscal fourth quarter results on Tuesday, January 31. We expect Exxon Mobil shares to likely trade lower, with sales and earnings both marginally missing market expectations. Oil prices have fallen significantly since last summer, when they rose into the triple digits after the Russian invasion of Ukraine. It should be noted that higher natural gas prices in the third quarter helped offset weaker crude oil prices, helping Exxon achieve record results in that period. However, gas prices have also fallen from their recent peak. The company announced in an SEC filing that it expects to post lower earnings for the fourth quarter. The energy giant expects lower oil and gas prices to negatively impact its revenues by $3.3 billion to $4.1 billion, compared to the third quarter.

Our forecast indicates Exxon Mobil’s valuation is around $106 per share, which is 10% lower than the current market price. View our interactive dashboard analysis at Exxon Mobil profit example: What to expect in Q4? for more details.

(1) Revenue is expected to be slightly below consensus estimates

Trefis estimates Exxon Mobil’s fourth quarter 2022 revenues at approximately $92.3 billion, slightly below consensus estimate. Third-quarter revenues grew 52% year-over-year (yoy) to $112.1 billion, compared to $73.8 billion in the same quarter last year, driven by skyrocketing natural gas prices. Production in the third quarter totaled 3.7 million barrels of oil equivalent (boe)/day, including a quarterly record from the Permian Basin of nearly 560,000 barrels of oil equivalent (boe/day). To add to this, gas realizations increased 22% due to European supply concerns and efforts to stockpile for the winter, more than offsetting the impact of declining crude oil realizations, which were down 12% due to a modest increase in supply.

It should be noted that there are several promising projects that will benefit XOM for many years to come. One is off the coast of Guyana, where Exxon Mobil has recently started 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 a day now) to reach nearly 1 million barrels per day by the end of the decade. will produce per day. . Exxon Mobil is also working hard to diversify into renewable energy with technologies such as blue hydrogen and carbon capture. The company envisions carbon capture and storage becoming a $4 trillion industry by 2050.

(2) EPS is also likely to marginally miss consensus estimates

Exxon Mobil’s earnings per share in Q4 2022 are expected to be $3.26 according to Trefis analysis, slightly below the consensus estimate of $3.31. It should be noted that XOM’s third quarter net income was a record $19.66 billion, or $4.68/share, up 10% from the prior quarter’s $17.9 billion , which also produced a record profit at the time. Profits were driven by record refining volumes, strict cost controls and higher natural gas prices.

(3) Estimated share price lower than the current market price

Along our way XOMs valuationwith estimated earnings per share of approximately $13.29 and a P/E multiple of approximately 8.0x in fiscal 2022, this translates to a price of nearly $106, which is nearly 10% lower than the current market price.

It’s helpful to see how his peers are doing. Exxon Mobil Peers shows how XOM stock compares to peers on metrics that matter. Other useful comparisons for companies in different sectors can be found at Peer Comparisons.

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