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ExxonMobil (XOM) to Post Q2 Earnings: Is a Beat in Store?

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Exxon Mobil Corporation (XOM - Free Report) is set to report second-quarter 2020 results on Jul 31, before the opening bell.

In the last-reported quarter, the leading integrated energy company reported earnings of 53 cents per share that beat the Zacks Consensus Estimate of 4 cents, thanks to growth in production volumes from the prolific Permian and Guyana oil resources.

Notably, ExxonMobil beat earnings in three of the past four quarters, the average surprise being 307.9%, as shown in the chart below.

Let’s see how things have shaped up prior to the announcement.

Trend in Estimate Revision

The Zacks Consensus Estimate for second-quarter loss of 65 cents has seen one upward revision and five downward movements in the past 30 days. The figure suggests a year-over-year decline of 189%.

Exxon Mobil Corporation Price and EPS Surprise

 

Exxon Mobil Corporation Price and EPS Surprise

Exxon Mobil Corporation price-eps-surprise | Exxon Mobil Corporation Quote

Further, the Zacks Consensus Estimate for revenues is pegged at $33.6 billion, indicating a decline of 51.4% from the year-ago reported figure.

Factors to Note

From April-end, the price of West Texas Intermediate (WTI) crude improved more than 239% through the June quarter owing to partial recovery in fuel demand with the easing of lockdown measures. The recovered commodity pricing scenario is likely to have given some support to the company’s upstream business.

However, ExxonMobil’s overall worldwide exploration and production activities are likely to decline from the year-ago period owing to the virus outbreak. Notably, oil and gas resources across the globe have witnessed a decline in total rig count in all months of the June quarter of 2020. This is likely to lower oil equivalent production volumes of most energy majors with ExxonMobil unlikely to be an exception. Thus, the consensus estimate for the company’s daily oil equivalent production is pegged at 3,632 thousand barrels (MBoE/D), suggesting a decline from 3,909 MBoE/D in the second quarter of 2019.

Also, as compared to the prior-year comparable quarter, ExxonMobil’s refining business is likely to take a hit owing to the pandemic. Importantly, for ExxonMobil’s worldwide daily refinery throughput, the consensus estimate is pegged at 2,794 thousand barrel per day (MBbl/D), suggesting a decline from 3,930 MBbl/D in the year-ago quarter.

However, partial resumption of economic activity in the June quarter of 2020 and thus some recovery in fuel demand since more people got back to work, especially in the months of May and June, are likely to give some support to the refining operations of the leading global integrated energy company.

Earnings Whispers

Our proven model does not conclusively predict 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. That is not the case here as you will see below.  

Earnings ESP: Earnings ESP represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate. ExxonMobil has an Earnings ESP of -0.80%. 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.

Stocks That Warrant a Look

Though an earnings beat looks uncertain for ExxonMobil, here are a few firms that you may want to consider on the basis of our model. These have the right combination of elements to post an earnings beat in the upcoming quarterly reports:

Cabot Oil Gas Corporation (COG - Free Report) has an Earnings ESP of +5.00% and is a Zacks #3 Ranked player. The company is scheduled to release second-quarter results after the closing bell on Jul 30. You can see the complete list of today’s Zacks #1 Rank stocks here.

Antero Midstream Corporation (AM - Free Report) has an Earnings ESP of +27.87% and a Zacks Rank of 3. It is scheduled to report second-quarter results on Jul 29.

Enbridge Inc (ENB - Free Report) has an Earnings ESP of +0.78% and a Zacks Rank #3. The firm is scheduled to release earnings on Jul 29.

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