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Zacks Earnings Trends Highlights: Exxon and Chevron
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For Immediate Release
Chicago, IL – November 2, 2023– Zacks Director of Research Sheraz Mian says, "The earnings growth for this group of 311 S&P 500 members represents a notable improvement over what we had seen from this group of companies in other recent periods. Still, the revenue growth pace represents a clear decelerating trend."
Earnings Growth Turns Positive
Note: The following is an excerpt from this week's Earnings Trends report. You can access the full report that contains detailed historical actual and estimates for the current and following periods, please click here>>>
Here are the key points:
With more than 60% of the Q3 results already out, earnings growth for the quarter is on track to turn positive despite the significant Energy sector drag, which follows three back-to-back quarters of declines.
For the 311 S&P 500 companies that have reported Q3 results, total earnings are up +2.3% from the same period last year on +2.0% higher revenues, with 80.7% beating EPS estimates and 61.7% beating revenue estimates.
The earnings growth for this group of 311 S&P 500 members represents a notable improvement over what we had seen from this group of companies in other recent periods. Still, the revenue growth pace represents a clear decelerating trend.
Earnings estimates for the current period (2023 Q4) have started coming down significantly since the quarter got underway, a negative revisions trend that contrasts with what we experienced ahead of the 2023 Q3 and Q2 reporting cycles.
Despite the recent turnaround in oil prices, benchmark prices for the commodity were down more than -10% in Q3 from the same period last year. This unfavorable year-over-year oil price comparison is the primary reason for the Energy sector's weak growth numbers in the ongoing Q3 earnings season.
With results from exactly half of the Energy sector companies in the S&P 500 index already out, total earnings for the sector are down -37.1% from the same period last year on -17% lower revenues.
Last week's Q3 earnings for Exxon (XOM - Free Report) and Chevron (CVX - Free Report) represented year-over-year declines of -51.2% and -46.9%, respectively. While the revisions trend for the current and coming periods has been positive for both companies on the back of improving commodity prices, the year-over-year earnings comparisons still remain negative.
For example, Exxon is currently expected to earn $2.22 per share in the December quarter, which has risen from $2.12 per share a month ago and $2.03 per share three months back. But even the improved $2.22 per share earnings estimate is -34.7% below what Exxon earned in 2022 Q4.
Exxon and Chevron have been in the news lately for announcing major M&A deals, with the former acquiring Pioneer Natural and the latter Hess. Both transactions are still pending.
For 2023 Q3 as a whole, combining the actual Energy sector results that have come out with estimates for the still-to-come companies, total earnings for the sector are expected to be -37.2% below the year-earlier level.
Had it not been for this Energy sector drag, Q3 earnings growth for the S&P 500 index would be +6.9% instead of +1.5% with the sector included.
Looking ahead to the current and coming periods for the Energy sector, the magnitude of declines is expected to steadily improve, with 2023 Q4 earnings expected to be -21.3% below the year-earlier level and 2024 Q1 earnings currently expected to be -7.9% below the same period the year before. Earnings growth for the sector is expected to turn positive in 2024 Q2 at +22%.
Looking at Q3 expectations as a whole, total S&P 500 earnings are expected to be up +1.5% from the same period last year on +1.4% higher revenues.
From these quarterly earnings-growth expectations, the long-feared recession doesn't show up in this near-term earnings outlook.
This big-picture view of corporate profitability doesn't leave much room for that development either, as shown in the chart above.
Given the emerging consensus on the 'soft-landing' outlook for the economy, one can expect this favorable turn in the overall earnings picture to strengthen further as companies report Q3 results and share trends in underlying business.
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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss.This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performancefor information about the performance numbers displayed in this press release.
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Zacks Earnings Trends Highlights: Exxon and Chevron
For Immediate Release
Chicago, IL – November 2, 2023– Zacks Director of Research Sheraz Mian says, "The earnings growth for this group of 311 S&P 500 members represents a notable improvement over what we had seen from this group of companies in other recent periods. Still, the revenue growth pace represents a clear decelerating trend."
Earnings Growth Turns Positive
Note: The following is an excerpt from this week's Earnings Trends report. You can access the full report that contains detailed historical actual and estimates for the current and following periods, please click here>>>
Here are the key points:
Despite the recent turnaround in oil prices, benchmark prices for the commodity were down more than -10% in Q3 from the same period last year. This unfavorable year-over-year oil price comparison is the primary reason for the Energy sector's weak growth numbers in the ongoing Q3 earnings season.
With results from exactly half of the Energy sector companies in the S&P 500 index already out, total earnings for the sector are down -37.1% from the same period last year on -17% lower revenues.
Last week's Q3 earnings for Exxon (XOM - Free Report) and Chevron (CVX - Free Report) represented year-over-year declines of -51.2% and -46.9%, respectively. While the revisions trend for the current and coming periods has been positive for both companies on the back of improving commodity prices, the year-over-year earnings comparisons still remain negative.
For example, Exxon is currently expected to earn $2.22 per share in the December quarter, which has risen from $2.12 per share a month ago and $2.03 per share three months back. But even the improved $2.22 per share earnings estimate is -34.7% below what Exxon earned in 2022 Q4.
Exxon and Chevron have been in the news lately for announcing major M&A deals, with the former acquiring Pioneer Natural and the latter Hess. Both transactions are still pending.
For 2023 Q3 as a whole, combining the actual Energy sector results that have come out with estimates for the still-to-come companies, total earnings for the sector are expected to be -37.2% below the year-earlier level.
Had it not been for this Energy sector drag, Q3 earnings growth for the S&P 500 index would be +6.9% instead of +1.5% with the sector included.
Looking ahead to the current and coming periods for the Energy sector, the magnitude of declines is expected to steadily improve, with 2023 Q4 earnings expected to be -21.3% below the year-earlier level and 2024 Q1 earnings currently expected to be -7.9% below the same period the year before. Earnings growth for the sector is expected to turn positive in 2024 Q2 at +22%.
Looking at Q3 expectations as a whole, total S&P 500 earnings are expected to be up +1.5% from the same period last year on +1.4% higher revenues.
From these quarterly earnings-growth expectations, the long-feared recession doesn't show up in this near-term earnings outlook.
This big-picture view of corporate profitability doesn't leave much room for that development either, as shown in the chart above.
Given the emerging consensus on the 'soft-landing' outlook for the economy, one can expect this favorable turn in the overall earnings picture to strengthen further as companies report Q3 results and share trends in underlying business.
Why Haven't You Looked at Zacks' Top Stocks?
Since 2000, our top stock-picking strategies have blown away the S&P's +6.2 average gain per year. Amazingly, they soared with average gains of +46.4%, +49.5% and +55.2% per year. Today you can access their live picks without cost or obligation.
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Zacks.com provides investment resources and informs you of these resources, which you may choose to use in making your own investment decisions. Zacks is providing information on this resource to you subject to the Zacks "Terms and Conditions of Service" disclaimer. www.zacks.com/disclaimer.
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss.This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performancefor information about the performance numbers displayed in this press release.