Claudia Assis, MarketWatch

SAN FRANCISCO
EnergiesNet.com 01 28 2023

Exxon Mobil Corp. is slated to report earnings before the bell on Tuesday, hot on the heels of results showing a mixed quarter for Chevron Corp., and amid renewed scrutiny over oil giants’ share buyback programs.

Exxon XOM, -1.83% in December set a $50 billion buyback program. The Irving, Texas company, the U.S. largest integrated oil producer, warned Wall Street earlier this month to dial down expectations for quarterly profit, but its yearly profit, like Chevron’s, are also expected to be at a record.

Chevron CVX, -4.44% on Friday reported fourth-quarter earnings that slightly missed the mark and revenues that were above consensus expectations. Chevron’s 2022 profit hit a record $35.5 billion.

Earlier this week, Chevron announced a $75 billion buyback program that has raised some eyebrows and has been called “massive.”

Here’s what to expect for Exxon:

Earnings: Analysts polled by FactSet expect Exxon to report adjusted earnings of $3.29 a share in the fourth quarter. That would compare with adjusted earnings of $2.05 a share in the fourth quarter of 2021, and $4.45 a share in the third quarter.

Estimize, a crowdsourcing platform that gathers estimates from Wall Street analysts as well as buy-side analysts, fund managers, company executives, academics and others, is expecting an adjusted profit of $3.41 a share for Exxon.

Revenue: The analysts surveyed by FactSet are calling for sales of $97.34 billion for the company, which would compare with $84.97 billion in the fourth quarter of 2022.

Estimize is expecting $100 billion in revenue for the quarter.

Either way the fourth-quarter revenue expectations are a step down from third-quarter revenue of $112 billion.

Stock price: Exxon shares have far outperformed the broader index, advancing 54% in the 12 months, contrasting with a decline of about 6% for the S&P 500 index.

What else to expect: Exxon in early January told Wall Street to expect that changes in liquids and gas prices will reduce its fourth-quarter earnings by up to $4.1 billion when compared with third-quarter results.

The fourth quarter was expected to be weaker for integrated oil companies in relation to their third quarter, analysts at Barclays said in a recent note.

The “overriding factors for the sector investment thesis are capital discipline/cash returns, which underwrite our positive view,” they said. Capital efficiency will be under a microscope, the analysts said.

Investors, for their turn, appear to be on a “wait and see mode,” waiting for a better read on the economy over the next couple of months, the Barclays analysts said.

Citi analyst Alastair Syme said in a note around the time of Exxon’s warning that the note to Wall Street suggested an earnings mid-point that would be “broadly in-line with market consensus, albeit with weaker upstream,” or the exploration and production side of the business.

That would be compensated by likely “a more resilient picture in refining,” Syme said.

Shares of Exxon have far outperformed the broader index in the last 12 months, up 55% versus a decline of around 6% for the S&P 500 index. SPX, +0.25%

marketwatch.com 01 27 2023