| Will ExxonMobil (XOM) Pull a Surprise this Earnings Season? | |
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Oil major ExxonMobil Corporation XOM is expected to report third-quarter 2015 earnings on Oct 30, before the market opens.
Last quarter, the company’s earnings of $1.00 per share missed the Zacks Consensus Estimate of $1.11. The bottom line also decreased substantially from $2.05 in the year-ago quarter. Let’s see how things are shaping up prior to the announcement.
What's Driving the Better-Than-Expected Earnings?
ExxonMobil is in excellent financial health and has an AAA credit profile. The company’s free cash flow generation remains strong and it consistently returns more to its shareholders. So far, it has steadily raised its dividend, which currently amounts to an annualized $2.76 per share.
The company boasts diversified operations across the world with several new projects expected to come online through 2015. Though Exxon functions in all corners of the globe, the main areas of its focus for the coming years in terms of new volumes are the U.S., Canada, Kazakhstan, West Africa, Australia, Russia, Angola and Iraq.
On the exploration front, the company concentrates on unconventional natural gas across North America as well as offshore regions, including the Gulf of Mexico. Notably, Exxon achieved success in the exploration of a well in offshore Tanzania, where it came across a massive amount of recoverable gas of high quality. Such discoveries are likely to boost ExxonMobil’s third-quarter earnings.
However, given its large base, achieving growth in oil and natural gas production has been a challenge for ExxonMobil over the past several years. With the established oil-producing regions of Europe and North America well beyond their prime, the search for growth has pushed the company toward riskier regions. As a result, the share of production coming from Qatar and West Africa is on the rise.
ExxonMobil continues to cut capital spending to tackle the weak pricing environment. Despite such measures, however, the company’s free cash flow position is likely to come under pressure, which may affect dividends and share repurchases. The company has already cut its share repurchase program twice this year.
Earnings Whispers
Our proven model does not conclusively show that ExxonMobil is likely to beat earnings this quarter. 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.
Zacks ESP: Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, stands at 0.00%.
Zacks Rank: ExxonMobil carries a Zacks Rank #3. Though a Zacks Rank #3 increases the predictive power of ESP, a 0.00% ESP makes surprise predictions difficult.
Conversely, the Sell-rated stocks (Zacks Rank #4 or 5) should never be considered going into an earnings announcement.
Stocks to Consider
Some stocks from the energy sector that have both a positive Earnings ESP and a favorable Zacks Rank are:
Natural Gas Services Group Inc NGS has an Earnings ESP of +21.05% and a Zacks Rank #1.
Exterran Partners LP EXLP has an Earnings ESP of +19.23% and a Zacks Rank #2.
Spectra Energy Partners, LP SEP has an Earnings ESP of +10.67% and a Zacks Rank #3.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >> Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report EXXON MOBIL CRP (XOM): Free Stock Analysis Report SPECTRA EGY PTR (SEP): Free Stock Analysis Report EXTERRAN PTNRS (EXLP): Free Stock Analysis Report NATURAL GAS SVC (NGS): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research
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Exxon Mobil is a and oil producing company based in United states of america. Exxon Mobil is listed in Germany, in United Kingdom and in United States of America. Its market capitalisation is US$ 499.8 billions as of today (€ 467.1 billions). Its stock quote reached its lowest recent point on March 14, 1997 at US$ 100.12, and its highest recent level on April 26, 2024 at US$ 117.96. Exxon Mobil has 4 237 270 016 shares outstanding. |