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ExxonMobil (XOM) to Post Q1 Earnings: What's in the Cards?

Zacks Equity Research
Lower contributions from all the reporting segments of ExxonMobil (XOM) hurt its Q1 numbers.

Exxon Mobil Corporation XOM is set to release first-quarter 2019 results, before the opening bell on Apr 26.

The company surpassed the Zacks Consensus Estimate in two of the last four quarters, the average positive surprise being 7.3%. Let’s see how things are shaping up prior to the announcement.

Which Way Are Estimates Headed?

Let’s take a look at the estimate revision trend to get a clear picture of what analysts expect from the earnings release.

The Zacks Consensus Estimate for first-quarter earnings of 75 cents has been revised downward over the last 30 days. It suggests a decline of 31.2% from the year-ago quarter.

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Further, the consensus estimate calls for revenues of $67.9 billion, indicating a marginal drop of 0.4% from the prior-year quarter.

Factors to Consider

Since upstream operations generally make up for majority of the integrated energy player’s earnings, weakness in domestic and international operations could hurt its bottom line. It seems that although oil prices have risen through the quarter, lower production volumes could offset the positive.

Notably, the Zacks Consensus Estimate for earnings after tax from ExxonMobil’s non-U.S. upstream operations stands at $2,442 million, lower than $3,048 million reported in the prior quarter and $3,068 million in the year-ago quarter.

Also, for upstream operations in the domestic region, the Zacks Consensus Estimate for after-tax loss stands at $55 million, against the prior quarter and year-ago quarter earnings of $265 million and $429 million, respectively.

Moreover, an uptick in oil prices through first-quarter of 2019 was not favorable for the company’s refining businesses. Since crude is used by refiners as raw materials for producing products like gasoline, the recovery in oil has raised the input price for the company’s refining operations.

Earnings Whispers

Our proven model does not conclusively show a beat for ExxonMobil this earnings season. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here as you will see below.

Earnings ESP: Earnings ESP, which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate, is 0.00%. This is because both the Most Accurate Estimate and the Zacks Consensus Estimate stand at 75 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: ExxonMobil carries a Zacks Rank #3. Though a favorable Zacks Rank increases the predictive power of ESP, the company’s 0.00% ESP makes surprise prediction difficult. 

Meanwhile, we caution investors against stocks with a Zacks Rank #4 or 5 (Sell-rated) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks to Consider

Though an earnings beat looks uncertain for ExxonMobil, here are a few firms that you may want to consider on the basis of our model. These have the right combination of elements to post an earnings beat this quarter:

Apache Corporation APA has an Earnings ESP of +28.93% and a Zacks Rank #2. The company is slated to announce first-quarter earnings on May 1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Antero Resources Corporation AR is set to report first-quarter earnings on May 1. The stock has an Earnings ESP of +6.99% and a Zacks Rank of 3.

Cabot Oil & Gas Corporation COG has an Earnings ESP of +4.25% and a Zacks Rank of 2. The company is anticipated to release first-quarter earnings on Apr 26.

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Exxon Mobil Corporation (XOM) : Free Stock Analysis Report
 
Apache Corporation (APA) : Free Stock Analysis Report
 
Antero Resources Corporation (AR) : Free Stock Analysis Report
 
Cabot Oil & Gas Corporation (COG) : Free Stock Analysis Report
 
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Zacks Investment Research