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ExxonMobil (XOM) to Report Q4 Earnings: A Beat in the Cards?

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Zacks Equity Research
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Exxon Mobil Corporation XOM is expected to beat fourth-quarter 2020 earnings estimates when it reports results on Feb 2, before the opening bell.

In the last reported quarter, the leading integrated energy company reported a loss of 18 cents per share, narrower than the Zacks Consensus Estimate of a loss of 28 cents, owing to higher margins from the Chemical business in the United States. This was offset partially by lower oil-equivalent production volumes and commodity prices.

ExxonMobil beat earnings estimates in two of the last four quarters but missed the same on the other two occasions, delivering an average surprise of 310.7%. 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 fourth-quarter earnings per share of 1 cent has witnessed four upward revisions and one downward movement over the past 30 days. The estimated figure suggests a decline of 97.6% from the prior-year reported number.

The consensus estimate for fourth-quarter revenues of $48.6 billion indicates a 27.7% 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 +107.40% as the Most Accurate Estimate of 2 cents per share is pegged higher than the Zacks Consensus Estimate of a penny. 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.

Factors Driving the Better-Than-Expected Earnings

All eyes are currently on ExxonMobil’s upstream operations, which normally deliver massive profits. Prices and production of commodities are the two key parameters that determine the fate of upstream operations. The price of crude oil in the December quarter recovered sequentially, thanks to the easing of social-distancing measures, which in turn boosted demand. Even though overall production in expected to have declined in the fourth quarter, improving commodity prices are anticipated to have driven better-than-expected profits.

U.S. crude oil, natural gas liquids, bitumen and synthetic oil production is expected to have risen in the fourth quarter. The Zacks Consensus Estimate for net production of liquids in the United States is pegged at 693 thousand barrels per day (Mbpd), suggesting a rise from the year-ago level of 665 Mbpd.

Let us consider the energy major’s other segments. The Zacks Consensus Estimate for the company’s petroleum product sales in Canada is pegged at 478 Mbpd, indicating a rise from the year-ago figure of 444 Mbpd. Moreover, the consensus estimate for fourth-quarter refinery throughput in Canada is pegged at 368 Mbpd, signaling a rise from 322 Mbpd in the year-ago period.

While the overall business scenario reflects a struggling period for energy companies, thanks to the coronavirus pandemic, the above-mentioned factors are expected to have boosted ExxonMobil’s bottom line.

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:

Diamondback Energy, Inc. FANG has an Earnings ESP of +7.67% and a Zacks Rank #2, currently. The company is scheduled to release quarterly earnings on Feb 22. You can see the complete list of today’s Zacks #1 Rank stocks here.

Callon Petroleum Company CPE has an Earnings ESP of +27.15% and is a Zacks #3 Ranked player. The company is scheduled to release fourth-quarter results on Feb 24.

Continental Resources, Inc. CLR has an Earnings ESP of +33.86% and a Zacks Rank of 3. It is scheduled to report fourth-quarter results on Feb 16.

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