Hopes to beat estimates
Before the opening bell, Exxon Mobil Corporation (XOM) is set to report Q4 2022 results on Tuesday, January 31. According to Zacks's estimates, the consensus expectation is $3.18 EPS and $99.7 billion in revenue. Expected EPS shows an increase of 55.1% from the year ago, while revenue should confirm a 17.3% improvement year over year. Wall Street analysts expect $3.29 EPS and 97.17B Revenue.
Three times out of the last four quarters, earnings were better than estimates. In quarter three, XOM reported earnings per share of $4.45.
The main reason for better estimates in previous quarters was higher production estimates, which were made possible by the higher oil price and more drilling rigs. For this quarter, ExxonMobil's daily production expectations have sharply risen to 3,826 thousand barrels of oil equivalent per day (MBoe/d). Since the company had higher production, though prices slightly decreased during the desired quarter, escalating margins in fuel and crude sales likely boosted XOM's upstream operations, which can contribute to a record profit in 2022. However, analysts expect its upstream business to lower earnings by $3.3-$4.1 billion for the fourth quarter.
At the same time as the price of oil dropped, Natural Gas price also decreased, which can negatively impact its upstream business's profits by $2-$2.4 billion, compared with $1.3-$1.7 billion unfavorable impact of oil price reduction. However, those losses were offset by $1.3-$1.5 billion in upstream derivative gains. Other numbers in the report must be watched the refining margins and the company's chemical units reports.
In the second half of 2022, XOM's share price gained 28.2%, which is much better than 23.5% of the industry's growth. Since we expect some weakness in the global economy, energy demand can decrease. Therefore XOM stocks, for now, can be held, but there are better times to buy. However, looking at the mid and long-term, we can see lower levels soon that can give us a buying opportunity.
From the technical point of view, $104 is the first support, and then the key pivot can be reached at $99 before re-increasing. In the case of the overall positive sentiment of markets and beating estimates, new records around $120 are likely.
