Exxon Mobil Corporation (XOM Quick QuoteXOM - Free Report) is set to report fourth-quarter 2024 results on Jan. 31, 2024, before the opening bell.

Find the latest EPS estimates and surprises on Zacks Earnings Calendar.

The Zacks Consensus Estimate for fourth-quarter earnings is pegged at $1.58 per share, implying a decline of 36.3% from the year-ago reported number. The estimate was revised downward by six analysts in the past 30 days. The Zacks Consensus Estimate for fourth-quarter revenues is currently pegged at $87.1 billion, suggesting a 3.3% uptick from the year-ago actuals.

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XOM beat the consensus estimate for earnings in three of the trailing four quarters and missed the same once, with the average surprise being 2.9%. This is depicted in the graph below:  

Q4 Earnings Whispers for XOM

Our proven model doesn’t predict an earnings beat for XOM 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.

The leading integrated energy player has an Earnings ESP of -2.38%. XOM currently carries a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Factors to Note

ExxonMobil reported in a Form 8-K that weaker oil prices could reduce its fourth-quarter earnings from upstream operations by $0.5 billion to $0.9 billion sequentially. This projection seems reasonable, given that crude oil prices were stronger in the fourth quarter of 2023. According to the U.S. Energy Information Administration (“EIA”), the monthly average WTI spot prices for October, November and December 2024 were $71.99, $69.95, and $70.12 per barrel, respectively, compared with $85.64, $77.69, and $71.90 per barrel, in the year-ago months.

XOM also expects a lower industry refining margin to hurt its earnings from the Energy Products business segment in the December quarter by $0.3 billion to $0.7 billion compared to the previous quarter.

XOM’s Price Performance & Valuation

XOM's stock has soared 9.3% over the past year compared with the industry’s rise of 7.4%. BP plc (BP Quick QuoteBP - Free Report) , another integrated energy major, has declined 6.4% over the same time frame, while Chevron Corporation (CVX Quick QuoteCVX - Free Report) , in the same space, has gained 10.1%.

One-Year Price Chart

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With the price increase, XOM appears relatively overvalued. The company's current trailing 12-month enterprise value/earnings before interest, tax, depreciation and amortization (EV/EBITDA) ratio is 6.43, which is trading at a premium compared to the industry average of 4.05.

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Investment Thesis of XOM

The acquisition of Pioneer Natural Resources boosts ExxonMobil's production capabilities in the Permian Basin, one of the most profitable regions in the United States due to its exceptionally low production costs. The integrated energy major also has a strong pipeline of projects encompassing offshore Guyana assets, also known for low-cost structures.

XOM is well known for better utilization of invested funds and has a strong balance sheet. Hence, the energy major can rely on its solid financials to sail through an unfavorable business environment. Also, investing in alternative energy, such as carbon capture and lithium battery technology, offers potential growth opportunities for ExxonMobil. However, these projects require substantial capital and carry uncertain returns in the short term. Moreover, the company’s business is highly exposed to volatile oil and natural gas prices.

Last Word

Considering the backdrop, it may be prudent for investors to hold the stock now and potentially benefit from ExxonMobil's long-term growth prospects.