Exxon Mobil (XOM) Gears Up for Q1 Earnings: What's in Store?

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Exxon Mobil Corporation XOM is set to release first-quarter 2018 results, before the opening bell on Apr 27.   

The company failed to beat the Zacks Consensus Estimate in two of the last four quarters, the average negative surprise being 1.7%. In the last reported quarter, Exxon Mobil's earnings of 88 cents missed the Zacks Consensus Estimate of $1.06, thanks to lower refinery throughput.

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 $1.20 has been revised upward over the last seven days. It reflects growth of almost 26.3% from the year-ago quarter.

Exxon Mobil Corporation Price and EPS Surprise

Exxon Mobil Corporation Price and EPS Surprise | Exxon Mobil Corporation Quote

Further, analysts polled by Zacks expect revenues of $67.3 billion for the quarter, up 6.4% from the prior-year quarter.

Factors to Consider

Exxon Mobil has a leading position in the energy industry owing to the size and diversity of its asset base, both in terms of business mix and geographical footprint. The company's balance sheet is one of the best in the industry - with the debt to capitalization ratio of 11.2% being significantly lower than the  industry's  ratio of 27.3%.    

Upstream Operation:  The Zacks Consensus Estimate for earnings after tax from ExxonMobil's  non-U.S.  upstream operations stands at $3,271 million, higher than $1,291 million reported in the prior quarter and $2,270 million a year ago. 

For upstream operations in the  domestic  region, the Zacks Consensus Estimate for after-tax earnings is pinned at $205 million, against a profit of $7,061 million and a loss of $18 million in the preceding quarter and year-ago quarter, respectively.

Downstream Operation: The Zacks Consensus Estimate for earnings after tax from ExxonMobil's  non-U.S . downstream operations is pegged at $696 million, up from $646 million in the prior quarter but down from $824 million in the year-ago quarter.

For operations in the  United States , the Zacks Consensus Estimate of after-tax earnings stands at $285 million, lower than $918 million in the October-to-December quarter and $292 million in the prior-year quarter.

Earnings Whispers

Our proven model does not conclusively show a beat for Exxon Mobil this earnings season. This 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.

Zacks ESP:  Earnings ESP for the company is -4.50% as the Most Accurate estimate is $1.15, while the Zacks Consensus Estimate stands at $1.20. You can uncover the best stocks to buy or sell before they're reported with our  Earnings ESP Filter .  

Zacks Rank:  Exxon Mobil carries a Zacks Rank #3. Though a favorable Zacks Rank increases the predictive power of ESP, the company's negative 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 Exxon Mobil, 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:

Comstock Resources, Inc. CRK is an oil and gas explorer. The company has an Earnings ESP of +37.34% and a Zacks Rank #2. You can see  the complete list of today's Zacks #1 Rank stocks here .

Oil States International, Inc. OIS is a leading oilfield services player. The company has an Earnings ESP of + 32.83% and carries a Zacks Rank #3.

Pioneer Natural Resources Company PXD is an upstream energy company. The company has an Earnings ESP of +2.15% and a Zacks Rank #3.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

This article appears in: Investing , Business , Earnings , Stocks
Referenced Symbols: OIS , XOM , PXD , CRK

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