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Oil Stocks to Watch for Earnings on Jul 27: CVX, XOM & IMO
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With the earnings season gathering steam,a host of companies are expected to report quarterly results by the end of this week. Per the latest Earnings Outlook, 147 S&P 500 members have already reported quarterly results, with their total earnings up 23.3% from the same period last year on 9.1% higher revenues. Notably, 83.7% of the firms surpassed the Zacks Consensus Estimate for earnings, while 74.8% topped revenue estimates.
Combining the actual numbers reported by the 147 members and estimates of the pending 353 companies, total earnings are expected to be up 22.3% from the same period last year on 8.4% higher revenues. Moreover, 12 of the 16 Zacks sectors are expected to register double-digit earnings growth.
Bright Prospects of the Energy Sector
The ‘Energy’ sector started off the earnings season on an impressive note. Some of the companies that have come up with stronger-than expected results include Schlumberger Limited (SLB - Free Report) , Kinder Morgan, Inc. (KMI - Free Report) , among others.
For the few sector components (16.1% to be precise) on the S&P 500 Index that have reported Q2 results, total earnings surged 211% on 28.7% higher revenues. Most importantly, 60% of the energy companies surpassed earnings estimates while 80% of the firms beat revenue expectations.
Looking back at the Q1 earnings season, the sector’s earnings surged 79.6% from the same period last year — which is by far the highest growth among all sectors — on 14.5% higher revenues.
In Q2 again, the energy sector is poised to record the highest growth among all sectors. Per our expectations, the sector’s earnings are expected to more than double and jump 138.9% from second-quarter 2017, while the top line is likely to improve 18.8% from the year-ago levels.
Healthy Oil Price Drives the Sector
The oil benchmark in the United States attained its highest settlement since November 2014 in the second quarter, despite record high domestic production. Average West Texas Intermediate (WTI) crude prices for the month of April, May and June 2018 were recorded at $66.25, $69.98 and $67.87 per barrel, respectively, per data from the U.S. Energy Information Administration (EIA). These average prices were considerably higher than the year-ago respective prices of $51.06, $48.48 and $45.18.
Crude was supported by a variety of catalysts, including a series of buoyant weekly EIA crude inventory numbers, worries about tightening global supplies in the midst of strong demand and doubts regarding OPEC’s ability to boost production.
Meanwhile, since the crude oil and refined products prices don’t always move in lockstep, the crack differentials are also widening, leading to margin expansion and higher refining capacity rate for the refiners. Refiners are also reaping the benefit of increased demand for their products.
Needless to say, such favorable developments have buoyed investors’ optimism surrounding the sector’s second-quarter results.
CVX, XOM & IMO in Spotlight
In view of this bullish sentiment surrounding energy stocks, investors keenly await Q2 reports of the energy bigwigs like Exxon Mobil Corporation (XOM - Free Report) and Chevron Corporation (CVX - Free Report) . We have highlighted three energy companies that are slated to report second-quarter numbers on Jul 27. Let’s find out what’s in store for each one of them this earnings season.
California-based Chevron, one of the leading integrated majors, is expected to report quarterly results before the opening bell.
According to our quantitative model, a company needs the right combination of two key ingredients — a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) — to increase its odds of an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Note that we caution against Sell-rated stocks (Zacks Ranks #4 or 5) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
In the preceding three-month period, Chevron delivered a positive earnings surprise of 31.03% on the back of pricing and production gains. Coming to earnings surprise history, the supermajor surpassed estimates in three of the trailing four quarters.
According to our proven model, Chevron is expected to beat estimates this time as well, because it has the right combination of the two key ingredients. The company has an Earnings ESP of +0.06% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.
Chevron’s liquids-rich upstream segment is likely to benefit from higher crude price realizations. Further, the segment is expected to record higher production volumes on the back of major capital projects including Gorgon, as well as core developments in the Gulf of Mexico and Permian Basin. Notably, the Zacks Consensus Estimate for total oil and gas output is pegged at 2,860 thousand oil-equivalent barrels per day, around 3% higher than the prior-year quarter. Driven by production and pricing gains, the Zacks Consensus Estimate for its upstream segment’s profit is pegged at $2,909 million, reflecting massive growth from second-quarter 2017’s figure of $853 million.
ExxonMobil, the world’s largest publicly traded oil company, is set to report financial results before the opening bell. The company missed the Zacks Consensus Estimate for earnings in three of the last four quarters, with the average negative earnings surprise being 5.73%. However, things are likely to turn around this season as ExxonMobil — having a Zacks Rank #3 and an Earnings ESP of +1.29% — is expected to deliver stronger-than-expected results.
Notably, we expect the company to report healthy numbers owing to both the upstream and the downstream businesses. The Zacks Consensus Estimate for earnings after tax from ExxonMobil’s non-U.S. upstream operations stands at $2,848 million, higher than $1,367 million in the year-ago quarter. Also, for upstream operations in the domestic region, the Zacks Consensus Estimate for after-tax earnings stands at $252 million against the year-ago loss of $183 million.
For the downstream business, the Zacks Consensus Estimate for earnings after tax from ExxonMobil’s non-U.S. downstream operations is pegged at $852 million, higher than $621 million in the last reported quarter. For operations in the United States, the Zacks Consensus Estimate for after-tax earnings stands at $441 million, higher than $319 million recorded in the first quarter and $347 million in the prior-year quarter.
Imperial Oil Limited (IMO - Free Report) , Canada’s largest integrated petroleum company, is also set to unveil quarterly results before the opening bell. Despite a weak earnings surprise history,the company delivered a positive earnings surprise of 28.95% in the last reported quarter. Imperial Oil missed estimates in three out of the trailing four quarters, with an average negative earnings surprise of 34.04%. The company is likely to benefit from its downstream segment on the back of price-advantaged feedstocks. However, weakness in the upstream market amid discounted Canadian crude prices due to lack of takeaway capacity may limit the overall earnings.
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
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Oil Stocks to Watch for Earnings on Jul 27: CVX, XOM & IMO
With the earnings season gathering steam,a host of companies are expected to report quarterly results by the end of this week. Per the latest Earnings Outlook, 147 S&P 500 members have already reported quarterly results, with their total earnings up 23.3% from the same period last year on 9.1% higher revenues. Notably, 83.7% of the firms surpassed the Zacks Consensus Estimate for earnings, while 74.8% topped revenue estimates.
Combining the actual numbers reported by the 147 members and estimates of the pending 353 companies, total earnings are expected to be up 22.3% from the same period last year on 8.4% higher revenues. Moreover, 12 of the 16 Zacks sectors are expected to register double-digit earnings growth.
Bright Prospects of the Energy Sector
The ‘Energy’ sector started off the earnings season on an impressive note. Some of the companies that have come up with stronger-than expected results include Schlumberger Limited (SLB - Free Report) , Kinder Morgan, Inc. (KMI - Free Report) , among others.
For the few sector components (16.1% to be precise) on the S&P 500 Index that have reported Q2 results, total earnings surged 211% on 28.7% higher revenues. Most importantly, 60% of the energy companies surpassed earnings estimates while 80% of the firms beat revenue expectations.
Looking back at the Q1 earnings season, the sector’s earnings surged 79.6% from the same period last year — which is by far the highest growth among all sectors — on 14.5% higher revenues.
In Q2 again, the energy sector is poised to record the highest growth among all sectors. Per our expectations, the sector’s earnings are expected to more than double and jump 138.9% from second-quarter 2017, while the top line is likely to improve 18.8% from the year-ago levels.
Healthy Oil Price Drives the Sector
The oil benchmark in the United States attained its highest settlement since November 2014 in the second quarter, despite record high domestic production. Average West Texas Intermediate (WTI) crude prices for the month of April, May and June 2018 were recorded at $66.25, $69.98 and $67.87 per barrel, respectively, per data from the U.S. Energy Information Administration (EIA). These average prices were considerably higher than the year-ago respective prices of $51.06, $48.48 and $45.18.
Crude was supported by a variety of catalysts, including a series of buoyant weekly EIA crude inventory numbers, worries about tightening global supplies in the midst of strong demand and doubts regarding OPEC’s ability to boost production.
Meanwhile, since the crude oil and refined products prices don’t always move in lockstep, the crack differentials are also widening, leading to margin expansion and higher refining capacity rate for the refiners. Refiners are also reaping the benefit of increased demand for their products.
Needless to say, such favorable developments have buoyed investors’ optimism surrounding the sector’s second-quarter results.
CVX, XOM & IMO in Spotlight
In view of this bullish sentiment surrounding energy stocks, investors keenly await Q2 reports of the energy bigwigs like Exxon Mobil Corporation (XOM - Free Report) and Chevron Corporation (CVX - Free Report) . We have highlighted three energy companies that are slated to report second-quarter numbers on Jul 27. Let’s find out what’s in store for each one of them this earnings season.
California-based Chevron, one of the leading integrated majors, is expected to report quarterly results before the opening bell.
According to our quantitative model, a company needs the right combination of two key ingredients — a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) — to increase its odds of an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Note that we caution against Sell-rated stocks (Zacks Ranks #4 or 5) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
In the preceding three-month period, Chevron delivered a positive earnings surprise of 31.03% on the back of pricing and production gains. Coming to earnings surprise history, the supermajor surpassed estimates in three of the trailing four quarters.
According to our proven model, Chevron is expected to beat estimates this time as well, because it has the right combination of the two key ingredients. The company has an Earnings ESP of +0.06% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.
Chevron’s liquids-rich upstream segment is likely to benefit from higher crude price realizations. Further, the segment is expected to record higher production volumes on the back of major capital projects including Gorgon, as well as core developments in the Gulf of Mexico and Permian Basin. Notably, the Zacks Consensus Estimate for total oil and gas output is pegged at 2,860 thousand oil-equivalent barrels per day, around 3% higher than the prior-year quarter. Driven by production and pricing gains, the Zacks Consensus Estimate for its upstream segment’s profit is pegged at $2,909 million, reflecting massive growth from second-quarter 2017’s figure of $853 million.
Chevron Corporation Price and EPS Surprise
Chevron Corporation Price and EPS Surprise | Chevron Corporation Quote
ExxonMobil, the world’s largest publicly traded oil company, is set to report financial results before the opening bell. The company missed the Zacks Consensus Estimate for earnings in three of the last four quarters, with the average negative earnings surprise being 5.73%. However, things are likely to turn around this season as ExxonMobil — having a Zacks Rank #3 and an Earnings ESP of +1.29% — is expected to deliver stronger-than-expected results.
Notably, we expect the company to report healthy numbers owing to both the upstream and the downstream businesses. The Zacks Consensus Estimate for earnings after tax from ExxonMobil’s non-U.S. upstream operations stands at $2,848 million, higher than $1,367 million in the year-ago quarter. Also, for upstream operations in the domestic region, the Zacks Consensus Estimate for after-tax earnings stands at $252 million against the year-ago loss of $183 million.
For the downstream business, the Zacks Consensus Estimate for earnings after tax from ExxonMobil’s non-U.S. downstream operations is pegged at $852 million, higher than $621 million in the last reported quarter. For operations in the United States, the Zacks Consensus Estimate for after-tax earnings stands at $441 million, higher than $319 million recorded in the first quarter and $347 million in the prior-year quarter.
Exxon Mobil Corporation Price and EPS Surprise
Exxon Mobil Corporation Price and EPS Surprise | Exxon Mobil Corporation Quote
Imperial Oil Limited (IMO - Free Report) , Canada’s largest integrated petroleum company, is also set to unveil quarterly results before the opening bell. Despite a weak earnings surprise history,the company delivered a positive earnings surprise of 28.95% in the last reported quarter. Imperial Oil missed estimates in three out of the trailing four quarters, with an average negative earnings surprise of 34.04%. The company is likely to benefit from its downstream segment on the back of price-advantaged feedstocks. However, weakness in the upstream market amid discounted Canadian crude prices due to lack of takeaway capacity may limit the overall earnings.
Imperial Oil Limited Price and EPS Surprise
Imperial Oil Limited Price and EPS Surprise | Imperial Oil Limited Quote
The Hottest Tech Mega-Trend of All
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
See Zacks' 3 Best Stocks to Play This Trend >>