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Energy Stock Earnings Line-up for Jan 31: CVX, XOM & IMO

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The ongoing fourth-quarter earnings season for the energy sector witnesses a host of companies gearing up for releasing results by this weekend. Notably, extreme volatility in oil and natural gas prices might affect the industry players’ fortunes this time around.

Before going into the details of the upcoming reports, let’s take a look at the factors that are likely to have impacted the sector participants’ quarterly performances.

Q4 Commodity Pricing Scenario

So, how does the oil and gas price compare with the year-ago valuations?

Per the U.S. Energy Information Administration, WTI price at the opening of fourth-quarter 2018 was $75.30 per barrel and exited the period at a moderate $45.41. Meanwhile, in 2019, prices were trending at $53.62 a barrel with the advent of the fourth quarter and shot to $61.06 at the end of December, reflecting an upside over a year’s time in the fundamentals.

However, the scenario is not that rosy on the natural gas front.

In fourth-quarter 2018, natural gas prices were $3.09 per MMBtu (Million British thermal unit) at the very outset and dipped slowly to $2.94 per MMBtu ending the December quarter of 2019 at.

Talking of last year’s price band, the fuel was seen trading even lower at $2.28 per MMBtu beginning the month of October and struggled throughout the fourth quarter to close at $2.18 per MMBtu.

The divergent graph of oil and natural gas prices noticed in the fourth quarter toughens the analysts’ task to conclusively predict the earnings direction for the period. Let’s get a glimpse of the situation to date.

Picture So Far

As is the norm, oil services companies — providers of technical products and services to drillers of oil and gas wells — kicked off the fourth-quarter earnings season for U.S. energy firms. Both sector giants Schlumberger (SLB - Free Report) and Halliburton HAL delivered better-than-expected earnings, attributable to a robust international market activity. The two energy bigwigs delivered some impressive end-of-year numbers.

However, for the energy companies having already reported, total earnings are down 9.1% from the same period last year on 3.8% lower revenues with 50% positive earnings surprises and 66.7% revenue estimate beats.

Outlook

The overall guidance for fourth-quarter energy earnings looks rather bleak. The latest Earnings Outlook indicates a plunge of 47.1% in the energy sector’s fourth-quarter 2019 earnings from the year-ago reported figure. At the same time, the top line is likely to have declined 3%.

Key Releases on Jan 31

Against this backdrop, let’s take a glance at how three energy players are placed ahead of their respective fourth-quarter results, slated for release on Jan 31, before the opening bell.

First, we have Chevron CVX, which is one of the largest publicly traded oil and gas companies in the world, based on proved reserves.

Our research shows that companies with the perfect combination of a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) and a positive Earnings ESP have high chances of beating estimates. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

You can see the complete list of today’s Zacks #1 Rank stocks here.

In the last reported quarter, this integrated oil and gas entity’s earnings topped the consensus mark by 8.16% on the back of strong output gains. However, the bottom line fell from the year-ago quarter amid lower year-over-year oil prices.

As far as positive surprises are concerned, this San Ramon, CA-based U.S. energy major’s earnings surpassed the Zacks Consensus Estimate in all the last four quarters, the average being 14.78%.

Chevron Corporation Price and EPS Surprise

Chevron Corporation Price and EPS Surprise

Chevron Corporation price-eps-surprise | Chevron Corporation Quote

Chevron is likely to deliver a positive surprise for fourth-quarter as it has the favorable combination of the key ingredients of an Earnings ESP of +0.80% and a Zacks Rank #2.

The Zacks Consensus Estimate for earnings is pegged at $1.47 on revenues of $39.85 billion. (Read more: Is a Beat in Store for Chevron This Earnings Season?)

Another U.S. oil major is ExxonMobil XOM. The company’s earnings trumped the Zacks Consensus Estimate in three of the last four quarters, the average positive surprise being 7.45%.

Exxon Mobil Corporation Price and EPS Surprise

Exxon Mobil Corporation Price and EPS Surprise

Exxon Mobil Corporation price-eps-surprise | Exxon Mobil Corporation Quote

Our proven model does not conclusively predict an earnings beat for the company this reporting cycle to be reported as it has an Earnings ESP of 0.00% and a Zacks Rank #3.

The Zacks Consensus Estimate for fourth-quarter earnings of 44 cents has been revised downward in the past seven days. The projected figure suggests a slump of 70.86% from the year-ago reported figure. The consensus estimate for revenues is pegged at $69.10 billion, indicating a drop of 3.88% from the prior-year reported figure.  (Read more: ExxonMobil to Report Q4 Earnings: What's in Store?)

Lastly, there is Imperial Oil Limited IMO. This subsidiary of ExxonMobil is one of the largest integrated oil companies of Canada, mainly engaged in oil and gas production, petroleum products refining and marketing, and chemical business. It reported third-quarter earnings per share of 42 cents, missing the Zacks Consensus Estimate of 44 cents. This underperformance is due to weaker contribution from the upstream and downstream segments.

As far as surprise record is concerned, the company’s earnings lagged the Zacks Consensus Estimate twice in the trailing four quarters, the average negative surprise being 0.69%.

Imperial Oil Limited Price and EPS Surprise

Imperial Oil Limited Price and EPS Surprise

Imperial Oil Limited price-eps-surprise | Imperial Oil Limited Quote

Our proven model does not conclusively predict a beat for the company this earnings season as it has an Earnings ESP of 0.00% and a Zacks Rank of 2.

The Zacks Consensus Estimate for fourth-quarter earnings of 27 cents has been revised downward in the past 7 days. The expected figure, however, implies a 67.07% decrease from the year-ago reported number of 82 cents. The consensus estimate for revenues is pegged at $6.67 billion, hinting at a rise of 11.73% from the prior-year reported figure. (Read more: What's in the Offing for Imperial Oil Q4 Earnings?)

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