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Zacks Industry Outlook Highlights: Exxon Mobil, Chevron, Royal Dutch Shell, TOTAL SE and Eni SpA

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For Immediate Release

Chicago, IL – February 23, 2021 – Today, Zacks Equity Research discusses Oil & Gas - Integrated, International, including Exxon Mobil Corporation (XOM - Free Report) , Chevron Corporation (CVX - Free Report) , Royal Dutch Shell plc (RDS.A - Free Report) , TOTAL SE (TOT - Free Report) and Eni S.p.A. (E - Free Report) .


Countries will gradually relax rules on socialising in a public space as the coronavirus vaccines are rolling out across the world. With the pace of vaccine distribution picking up, aiding global fuel demand, the outlook for the Zacks Oil and Gas Integrated International industry looks encouraging.

Thus, the business environment for upstream, midstream and downstream operations of international integrated energy firms is improving rapidly. Among the pack, Exxon Mobil Corp., Chevron Corp., Royal Dutch Shell, TOTAL SE and Eni SpA are well positioned to make the most of the exploding fuel demand.

About the Industry

The Zacks Oil and Gas Integrated International industry covers companies that are primarily involved in upstream, midstream and downstream businesses.

These companies have upstream businesses in the United States (including prolific shale plays and deepwater Gulf of Mexico), Asia, South America, Africa, Australia and Europe.

The midstream operations of integrated energy companies entail transporting oil, natural gas liquids and refined petroleum products. Under downstream businesses, the firms buy raw crude to produce refined petroleum products. The companies’ downstream activities also involve chemical businesses that manufacture raw material used for making plastics.

What’s Shaping the Future of the Oil & Gas Integrated International Industry?

Oil Price at Pre-Pandemic Mark: The price of West Texas Intermediate crude, which is trading at $60 per barrel (almost at pre-pandemic levels), has improved significantly since April 2020, when oil was in the negative territory. The momentum is likely to continue since the coronavirus vaccine rollout will possibly help economies across the world recover strongly this year, thereby aiding fuel demand.

Thus, oil and gas drillers are likely to continue adding rigs to prolific resources worldwide since the pricing environment is gradually improving. Hence, the favorable business scenario will continue to aid upstream business of international integrated energy players.

Midstream Demand to Recover: With possibilities of upstream energy companies continuing to add rigs, the production of oil and gas is expected to ramp up in 2021. This will likely boost demand for pipeline and storage assets since more volumes of the commodities will need to get transported and stored.

Improvement in Downstream Business: Since countries across the world will ramp up the rollout of coronavirus vaccines, this will encourage more people to go to office and travel. With more people coming out of strict social distancing measures, the demand for gasoline, diesel fuel and jet fuel will increase.

Diversifying Business: The international integrated energy companies are gradually investing money in renewable business. Thus, by diversifying operations, the companies will be able to capitalize on mounting demand for cleaner energy.

Zacks Industry Rank Indicates Bullish Outlook

The Zacks Oil and Gas Integrated International industry is part of the broader Zacks Oil - Energy sector. It carries a Zacks Industry Rank #41, which places it at the top 16% of more than 250 Zacks industries.

The group’s Zacks Industry Rank, which is basically the average of the Zacks Rank of all the member stocks, indicates encouraging near-term prospects. Our research shows that the top 50% of the Zacks-ranked industries outperforms the bottom 50% by a factor of more than 2 to 1.

The industry’s position in the top 50% of the Zacks-ranked industries is a result of positive earnings outlook for the constituent companies in aggregate. Before we present a few international integrated energy stocks that you may want to consider for your portfolio, let’s take a look at the industry’s recent stock market performance and current valuation.

Industry Lags Sector and S&P 500

The Zacks Oil and Gas Integrated International industry has lagged the broader Zacks Oil - Energy sector as well as the Zacks S&P 500 composite over the past year.

The industry has lost 8.4% over this period against the S&P 500’s improvement of 25.4% and the broader sector’s slump of 3.2%.

Industry’s Current Valuation

Since oil and gas companies are debt-laden, it makes sense to value them based on the EV/EBITDA (Enterprise Value/ Earnings before Interest Tax Depreciation and Amortization) ratio. This is because the valuation metric takes not just equity into account but also the level of debt.

On the basis of the trailing 12-month enterprise value-to EBITDA (EV/EBITDA) ratio, the industry is currently trading at 4.69X, lower than the S&P 500’s 16.54X. It is also below the sector’s trailing-12-month EV/EBITDA of 5.31X.

Over the past five years, the industry has traded as high as 9.87X, as low as 2.84X, with a median of 6.03X.

5 Integrated International Stocks Moving Ahead of the Pack

Royal Dutch Shell: Apart from a strong presence in oil and gas business, the integrated energy major is trying to capitalize on the expanding renewable energy space. It has grand plans of becoming a net-zero emission company by 2050. In the past 60 days, this Zacks Rank #1 (Strong Buy) stock has seen upward earnings estimate revision for 2021 and 2022, respectively. You can see the complete list of today’s Zacks #1 Rank stocks here.

TOTAL SE: In the liquefied natural gas business, the integrated energy major is the second-largest firm. Also, the company is capitalizing on the mounting demand for renewable energy and has set an ambitious target of becoming a net-zero emission company by 2050 or earlier. Notably, over the past 60 days, the #1 Ranked stock has seen upward earnings estimate revision for 2021.

Eni SpA: The integrated energy company is looking to make new discoveries of 2 billion barrels of oil equivalent within 2021-2024. Notably, this Zacks Rank of 1 stock is likely to see earnings growth of 327.1% this year.

Exxon Mobil Corp.: The company is among the largest integrated energy companies in the world. The energy major can rely on its strong balance sheet to survive the pandemic. The company is likely to see earnings growth of 712.1% in 2021 since global fuel demand is expected to recover significantly this year on coronavirus vaccine rollout. Moreover, in the next five years, the Zacks Rank #2 (Buy) stock is likely to see earnings growth of 6.3% versus the industry’s 5.5%.

Chevron Corp.: The firm is also a leading integrated energy player, with operations across the world. Apart from a strong balance sheet, Chevron has solid capital discipline that will help it tide over the pandemic. Notably, the energy major’s conservative capital spending, especially during the pandemic, will probably help the company generate considerable cashflow. The Zacks Rank #3 (Hold) stock has seen upward earnings estimate revisions for 2021 in the past 60 days.

5 Stocks Set to Double

Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.

Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.

Today, See These 5 Potential Home Runs >>

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