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Why Is Exxon (XOM) Down 1.5% Since Last Earnings Report?

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It has been about a month since the last earnings report for Exxon Mobil (XOM - Free Report) . Shares have lost about 1.5% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Exxon due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.

ExxonMobil Q3 Earnings Surpass Estimates, Improve Y/Y

ExxonMobil’s strong third-quarter 2018 results were aided by robust oil and gas prices along with healthier fuel margins.

The largest publicly traded integrated energy company’s earnings per share of $1.46 surpassed the Zacks Consensus Estimate of $1.21. The bottom line also improved from the year-earlier quarter’s 93 cents.

Total revenues in the quarter rose to $76,605 million from $61,100 million a year ago and also beat the Zacks Consensus Estimate of $72,455 million.

Operational Performance

Upstream: Quarterly earnings were recorded at $4.2 billion, up from $1.6 billion in the year-ago quarter. Robust price realizations from oil and natural gas primarily drove the upside.

Despite ramped up rig activities across unconventional acres in Permian region, total production averaged 3.786 million barrels of oil-equivalent per day (MMBOE/d), lower than 3.878 MMBOE/d a year ago.

Liquid production increased year over year to 2.286 million barrels per day (MMB/D) from 2.280 MMB/D. However, natural gas production was 9.001 BCF/d (billions of cubic feet per day), down from 9.585 BCF/d in the year-ago quarter.

Downstream: The segment recorded profits of $1.6 billion, up from $1.5 billion for the July-to-September quarter of 2017. Strong fuel margins in North America and Europe along with reduced planned maintenance works supported downstream businesses.  

ExxonMobil's refinery throughput averaged 4.4 million barrels per day (MMB/D), marginally higher than the year-earlier level of 4.3 MMB/D.

Chemical: This unit contributed to the company’s $713 million profit, down from $1.1 billion in the prior-year quarter, thanks to the commencement of turnaround works of chemical plant in Singapore.

Financials

During the quarter under review, ExxonMobil generated cash flow of $12.6 billion from operations and asset divestments, up from $8.4 billion in the year-ago quarter. The energy giant returned $3.5 billion to shareholders through dividends. Capital and exploration spending rose roughly 10% year over year to $6.6 billion.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in fresh estimates.

VGM Scores

At this time, Exxon has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with a C. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Exxon has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.




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