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What's in Store for Exxon Mobil (XOM) this Earnings Season?

Oil giant ExxonMobil CorporationXOM is expected to report fourth-quarter 2016 earnings on Jan 31, before the opening bell.

Last quarter, the company delivered a positive earnings surprise of 5.00%. However, ExxonMobil had an average negative earnings surprise of 6.83% in the last four quarters.

Exxon Mobil Corporation Price and EPS Surprise

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

Let's see how things are shaping up for this announcement.

Factors Likely to Influence this Quarter

Exxon Mobil is the world's best run integrated oil company based on its track record of high return on capital employed. The strongest return comes from the company's large scale of operations and diversification benefits. Also, the company's existing oil and gas development project pipeline is among the best in the industry. These factors should continue to support the company's bottom-line growth in the to-be-reported quarter as well as in the future.

However, Exxon Mobil's large base has been making it difficult for the firm to achieve growth in oil and natural gas production over the past several years. With the established oil-producing regions of Europe and North America well beyond their prime, the company has had to venture into riskier regions to seek growth. As a result, production from Qatar and West Africa is on the rise.

In the downstream business, however, the refining operations of the company are expected to display weakness as the retail price of gasoline - the end product of refiners - is lower than the year-ago comparable period.

Earnings Whispers

Our proven model does not conclusively show that ExxonMobil is likely to beat on earnings this quarter. 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. 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 -4.17%. This is because the Most Accurate Estimate stands at 69 cents and the Zacks Consensus Estimate is pegged at 72 cents. You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter ..

Zacks Rank : Exxon Mobil currently has a Zacks Rank #3. Though a favorable Zacks Rank increases the predictive power of ESP, a negative Earnings ESP makes surprise prediction difficult.

We caution against Sell-rated stocks (Zacks Ranks #4 or 5) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks to Consider

Here are some companies from the energy space which according to our model have the right combination of elements to post an earnings beat this quarter:

EQT Corp. EQT , which is expected to release earnings results on Feb 2, has an Earnings ESP of +22.22% and a Zacks Rank #2. You can see the complete list of today's Zacks #1 Rank stocks here .

Enterprise Products Partners LP EPD has an Earnings ESP of +3.13% and a Zacks Rank #3. The company is expected to release earnings results on Jan 30.

SM Energy Company SM has an Earnings ESP of +9.52% and a Zacks Rank #3. The company is expected to release earnings results on Feb 28.

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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.


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

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