First-quarter results from the three big U.S. oil companies – Exxon Mobil (XOM), Chevron (CVX) and ConocoPhillips (COP) – are now out. Sliding oil prices took a toll on their profitability but could not stop them from strongly beating the respective Zacks Consensus Estimate. Cost cutting efforts, higher production and robust refining business led to the outperformance.

Further, oil price has rebounded strongly from its lows hit in March, spreading optimism into the entire sector. On the revenue front, Exxon and Chevron surpassed our estimates while ConocoPhillips missed the same (see: all the energy ETFs here).

Earnings for Big Oil Companies in Focus

The largest U.S. oil company, Exxon Mobil, reported earnings per share of $1.17 that strongly outpaced the Zacks Consensus Estimate of 80 cents. The surprise beat was driven by higher oil wells output and strength in refining business despite the steep drop in crude prices. However, earnings declined substantially from $2.10 reported in the year-ago quarter, representing the lowest Q1 profit in six years. Total revenue fell 36.41% year over year to $67.6 billion, but surpassed the Zacks Consensus Estimate of $42.6 billion. Shares of XOM were up 1.1% in the last two days following the earnings announcement.    

Earnings at Chevron, which trails Exxon Mobil, came in at $1.37 per share, strongly outpacing the Zacks Consensus Estimate of 74 cents but deteriorating from the year-ago earnings of $2.36. Revenues dropped 35.1% year over year to $34.56 billion but were far above our estimate of $22.3 billion. Despite better-than-expected results, shares of CVX were down 1.82% at the close on May 1 (read: 3 Energy ETFs with Strong Gains over a Month).

Like the other two primes, the third largest oil player, ConocoPhillips topped our bottom line estimate. The company reported adjusted loss of 18 cents per share, which was narrower than the Zacks Consensus Estimate of a loss of 19 cents. However, revenues plummeted 50% year over year to $8 billion and were much below our estimate of $11.57 billion. The stock has lost 0.9% to date since its earnings release on April 30.

ETFs in Focus

Robust earnings put energy ETFs in focus, in particular those with the largest allocation to these oil behemoths. All the three stocks currently have a Zacks Rank #3 (Hold), suggesting smooth trading ahead for these stocks. Below we have highlighted some funds that are expected to move higher in the coming days given stronger-than-expected results (read: 3 Energy ETFs Leading The Oil Rally).

iShares U.S. Energy ETF (IYE)

This ETF tracks the Dow Jones U.S. Oil & Gas Index, giving investors exposure to the broad energy space. The fund holds 93 stocks in its basket with AUM of over $2.2 billion and average daily volume of around 1.2 million shares. The product charges 43 bps in fees per year from investors. Exxon Mobil and Chevron occupy the top two positions in the basket and take the bigger chunk of assets at 20.8% and 11.8%, respectively. ConocoPhillips on the other hand makes up for the fourth position at 4.7%. From a sector perspective, oil, gas and consumable fuels make up for nearly 80.3% share while oil equipment & services takes 18.7% share.

Vanguard Energy ETF (VDE)

This fund manages nearly $4.5 billion in asset base and provides exposure to a basket of 163 energy stocks by tracking the MSCI US Investable Market Energy 25/50 Index. The product sees solid volume of about 553,000 shares and charges 12 bps in annual fees. Exxon and Chevron are the top two firms with 21.2% and 11.7% allocation, respectively, while COP is the fourth firm making up for 4.5% share. Though the product is skewed toward the integrated oil & gas sector with 37.4% of assets, exploration and production, and equipment services provide a nice mix in the portfolio with double-digit exposure.

Energy Select Sector SPDR (XLE)

This is the largest and most popular ETF in the energy space with AUM of $14.8 billion and average daily volume of 24.3 million shares per day. Expense ratio came in at 0.15%. The fund follows the S&P Energy Select Sector Index and holds 43 securities in its basket. Here again, XOM and CVX occupy the top two spots with 15.1% and 13.0% share, respectively, while COP takes the sixth spot at 3.8%. In terms of industrial exposure, oil, gas & consumable fuels accounts for nearly 81.2% of the portfolio while energy equipment & services takes the remainder (read: Energy ETF Showdown: SPDR's XLE vs. Equal Weight RYE).

Bottom Line

Though the above-mentioned funds have a bleak outlook with an unfavorable Zacks Rank of 5 or ‘Strong Sell’ rating, these are expected to gain in the next few days based on robust earnings results and an oil price rebound.

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ISHARS-US EGY (IYE): ETF Research Reports
 
VIPERS-ENERGY (VDE): ETF Research Reports
 
SPDR-EGY SELS (XLE): ETF Research Reports
 
EXXON MOBIL CRP (XOM): Free Stock Analysis Report
 
CHEVRON CORP (CVX): Free Stock Analysis Report
 
CONOCOPHILLIPS (COP): Free Stock Analysis Report
 
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