Exxon Mobil Corporation (XOM Quick QuoteXOM - Free Report) has indicated a decline in its first-quarter operating results for 2024.

The announcement comes after a period of remarkable profitability, with the company, which is a leading force in the global energy sector, achieving record-breaking profits of $11.4 billion in the first quarter of 2023.

However, the latest data suggests a downturn, with operating profits expected to be $6.65 billion, suggesting a decline from the $11.6 billion reported in the first quarter of 2023 and the $7.63 billion posted in the previous quarter.

The reduction in profits is primarily attributed to weaker oil and gas prices, and significant losses in fuel derivatives. Natural gas prices have plummeted to multi-year lows, contributing to the anticipated decrease in upstream earnings by $200-$600 million.

In contrast, ExxonMobil expects a positive shift in its refining earnings, projecting an increase of $500-$700 million. Additionally, the company foresees an improvement of $200 million in its chemical units' margins or at least maintaining the previous quarter's level.

In terms of asset management, ExxonMobil predicts a $300-million boost from asset divestments in the first quarter. Despite these mitigating factors, the overarching sentiment is one of caution, as the energy sector faces declining commodity prices.

According to Zacks Earnings Trends, the energy sector's earnings are pegged at $31.6 billion for the first quarter of 2024, indicating a significant drop from the $41.9 billion recorded in the same quarter of 2023.

ExxonMobil's early release of its earnings guidance sets a precedent for other oil majors, hinting at a possibly challenging earnings season ahead. This development follows a period when four of the five supermajors exceeded analysts’ expectations despite the backdrop of lower commodity prices.

Price Performance

ExxonMobil shares have outperformed the industry in the past six months. The stock has gained 11.5% compared with the industry’s 8.4% growth.

Image Source: Zacks Investment Research

Zacks Ranks & Stocks to Consider

ExxonMobil currently carries a Zacks Rank #3 (Hold).

Investors interested in the energy sector may look at some better-ranked companies mentioned below. Each of these three companies presently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Global Partners (GLP Quick QuoteGLP - Free Report) is a leading operator of gasoline stations and convenience stores. Over the past 30 days, GLP has witnessed upward earnings estimate revisions for 2023 and 2024, respectively.

The Zacks Consensus Estimate for Global Partners’ 2024 and 2025 earnings per share (EPS) is pegged at $3.90 and $4.47, respectively. GLP currently has a Zacks Style Score of A for Value.

Murphy USA Inc. (MUSA Quick QuoteMUSA - Free Report) is a leading independent retailer of motor fuel and convenience merchandise in the United States.

The Zacks Consensus Estimate for MUSA’s 2024 and 2025 EPS is pegged at $26.32 and $27.94, respectively. The company has a Zacks Style Score of B for Value, Growth and Momentum. It has witnessed upward earnings estimate revisions for 2024 and 2025 in the past 30 days.

Sunoco LP (SUN Quick QuoteSUN - Free Report) is among the biggest motor fuel distributors in the U.S. wholesale market in terms of volumes. By distributing more than 10 fuel brands via 10,000 convenience stores under long-term distribution contracts, the partnership will continue to generate a stable cash flow. 

The Zacks Consensus Estimate for SUN’s 2024 and 2025 EPS is pegged at $4.96 and $4.40, respectively. The stock has witnessed upward earnings estimate revisions for 2024 and 2025 in the past 30 days. SUN currently has a Zacks Style Score of A for Momentum and B for Value.