Why Is Exxon (XOM) Down 3.4% Since Last Earnings Report?
It has been about a month since the last earnings report for Exxon Mobil (XOM). Shares have lost about 3.4% in that time frame, outperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Exxon due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
ExxonMobil Q4 Earnings Beat Estimates, Revenues Miss
ExxonMobil fourth-quarter 2022 earnings per share of $3.40, excluding identified items, beat the Zacks Consensus Estimate of $3.32 and improved from the year-ago profit of $2.05.
Total quarterly revenues of $95,429 million missed the Zacks Consensus Estimate of $101,056 million but jumped from the year-ago quarter’s $84,965 million.
The strong earnings resulted from higher realized commodity prices and oil-equivalent production, and strong refining margins.
Buyback
ExxonMobil announced that in 2023-2024, it will be repurchasing a cumulative of up to $35 billion of shares.
Operational Performance
Upstream
The segment of ExxonMobil reported quarterly earnings (excluding identified items) of $8,762 million, improving from $6,628 million in the year-ago quarter. Higher commodity prices primarily drove the upside.
Operations in the United States recorded a profit of $2,493 million, which increased from $2,031 million in the December quarter of 2021. The company reported a profit of $6,269 million from non-U.S. operations, improving from $4,597 million in the year-ago quarter.
Production: ExxonMobil’s total production averaged 3,822 thousand barrels of oil equivalent per day (MBoe/d), higher than 3,816 MBoe/d a year ago.
Liquid production increased to 2,461 thousand barrels per day (MBbls/d) from 2,385 MBbls/d in the prior-year quarter. The outperformance was owing to higher production, primarily in the United States and Canada. Yet, natural gas production was 8,167 million cubic feet per day (Mmcf/d), down from 8,584 Mmcf/d a year ago, primarily due to lower output from the United States and Canada.
Price Realization: In the United States, ExxonMobil recorded crude price realization of $82.14 per barrel, significantly higher than the year-ago quarter’s $73.62. The same metric for non-U.S. operations rose to $75.78 per barrel from $69.97.
Natural gas prices in the United States were $6.62 per thousand cubic feet (Mcf), higher than the year-ago quarter’s $4.96. Also, in the non-U.S. section, the metric improved to $21.11 per Mcf from $14.32.
Energy Products
The segment of ExxonMobil recorded a profit (excluding identified items) of $4,754 million, up from $901 million a year ago due to robust industry refining margins.
Chemical Products
This unit of ExxonMobil recorded a $250 million profit (excluding identified items), down from $1,371 million in the year-ago quarter on lower margins thanks to weaker demand in Europe and North America.
Specialty Products
This unit of ExxonMobil recorded an $800 million profit (excluding identified items), up from earnings of $482 million in the year-ago quarter, primarily due to higher margins.
Financials
In the quarter under review, ExxonMobil generated a cash flow of $18,954 million from operations and asset divestments. The company’s capital and exploration spending were $7,463 million.
At the end of fourth-quarter 2022, ExxonMobil’s total cash and cash equivalents were $29,640 million, and long-term debt amounted to $40,559 million.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates revision.
VGM Scores
Currently, Exxon has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with a D. However, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Exxon has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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