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Is a Beat in Store for ExxonMobil's (XOM) Q1 Earnings?

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·4 min read
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Exxon Mobil Corporation XOM is expected to beat first-quarter 2021 earnings estimates when it reports results on Apr 30, before the opening bell.

In the last reported quarter, the leading integrated energy company reported earnings of 3 cents per share, beating the Zacks Consensus Estimate of a penny owing to higher chemical margins. Notably, ExxonMobil beat bottom-line estimates in three of the last four quarters, the average surprise being 362.4%. This is depicted in the graph below:

Exxon Mobil Corporation Price and EPS Surprise

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 first-quarter earnings per share of 59 cent has witnessed six upward revisions and one downward movement over the past 60 days. The estimated figure suggests an improvement of 11.3% from the prior-year reported number.

However, the consensus estimate for first-quarter revenues of $55.2 billion indicates a 1.8% decline from the year-ago reported figure.

What the Quantitative Model Suggests

Our proven model predicts 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.

Earnings ESP: The company’s Earnings ESP is +8.09% as the Most Accurate Estimate of 64 cents per share is pegged higher than the Zacks Consensus Estimate of 59 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: ExxonMobil currently sports a Zacks Rank #1.

Factors Driving the Better-Than-Expected Earnings

The energy giant recently expressed concerns regarding the Texas winter storm having hit its first-quarter 2021 earnings by as much as $800 million.

Notably, the brutal storm in February caused havoc to power and water systems in Texas, thereby hurting the company’s production and sales volumes. However, the leading integrated energy company now projects a significant improvement in results for its three key business lines.

The company projects an improvement in operating results in the first quarter from oil and liquids businesses to $1.6 billion to $2 billion from the December quarter of 2020, thanks to an uptick in oil prices. The hike in natural gas prices is likely to have contributed another $300 million to $700 million to profits of the upstream business, as forecasted by the energy major. It is to be noted that the rolling out of coronavirus vaccines, which led to expectations that economies will rebound strongly later this year, primarily helped commodity prices move north in the March quarter of 2021.

Moreover, ExxonMobil estimated $300 million to $500 million of a sequential improvement in profit from the downstream business in the March quarter, thanks to strong refining margins. From the chemical business, the company estimated higher profit of $400 million to $600 million owing to healthy chemicals margin.

Other Stocks That Warrant a Look

Here are some other companies from the Energy space that you may also want to consider, as our model shows that these too have the right combination of elements to post an earnings beat in the upcoming quarterly reports:

Antero Resources Corporation AR has an Earnings ESP of +33.82% and is a Zacks #2 Ranked player. The company is scheduled to release first-quarter results on Apr 28. You can see the complete list of today’s Zacks #1 Rank stocks here.

EOG Resources, Inc. EOG has an Earnings ESP of +2.04% and a Zacks Rank of 1. It is slated to report first-quarter results on May 6.

Antero Midstream Corporation AM has an Earnings ESP of +11.63% and a Zacks Rank #3. The firm is scheduled to release first-quarter earnings on Apr 28.

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Exxon Mobil Corporation (XOM) : Free Stock Analysis Report

EOG Resources, Inc. (EOG) : Free Stock Analysis Report

Antero Midstream Corporation (AM) : Free Stock Analysis Report

Antero Resources Corporation (AR) : Free Stock Analysis Report

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