Exxon Mobil (NYSE:XOM) has been one of the most searched stocks on Zacks.com recently. Here are some key factors to consider that could influence its performance in the near future.

Over the past month, Exxon Mobil’s shares have declined by 8.8%, compared to a 3.7% increase in the S&P 500 composite. The Oil and Gas – Integrated – International industry, where Exxon operates, has seen a 7.4% drop during this period. The crucial question now is: where is the stock headed next?

While news and rumors can cause immediate stock price changes, long-term performance is driven by fundamental factors.

Earnings Estimate Revisions

Changes in earnings projections are prioritized because the fair value of a stock is based on the present value of its future earnings. The analysis focuses on how sell-side analysts adjust their earnings estimates based on the latest business trends. An upward revision in earnings estimates generally leads to an increase in the stock’s fair value, encouraging investors to buy the stock, thereby driving its price up. Empirical studies show a strong correlation between earnings estimate revisions and short-term stock price movements.

For the current quarter, Exxon is expected to post earnings of $2.42 per share, a 24.7% increase year-over-year. Over the past 30 days, the Consensus Estimate has decreased by 2.6%.

For the current fiscal year, the consensus earnings estimate is $9.36, indicating a 1.7% decline year-over-year. This estimate has fallen by 2.2% over the last 30 days.

For the next fiscal year, the consensus earnings estimate is $10.18, representing an 8.8% increase from what Exxon is expected to report this year. This estimate has decreased by 0.7% in the past month.

Projected Revenue Growth

Revenue growth is essential for sustained earnings growth. For Exxon, the consensus sales estimate for the current quarter is $91.69 billion, a 10.6% increase year-over-year. Estimates for the current and next fiscal years are $360.84 billion and $382.02 billion, reflecting changes of +4.7% and +5.9%, respectively.

Last Reported Results and Surprise History

In the last reported quarter, Exxon recorded revenues of $83.08 billion, a 4% decrease year-over-year. The EPS was $2.06, compared to $2.83 a year ago. The reported revenues were 4.06% below the Consensus Estimate, and the EPS was 5.94% lower than expected. Over the past four quarters, Exxon has surpassed EPS estimates once and exceeded consensus revenue estimates twice.

Valuation

Valuation is critical in investment decisions. To predict a stock’s future price performance, it’s important to assess whether its current price reflects the intrinsic value of the business and its growth prospects. Comparing valuation multiples such as P/E, P/S, and P/CF with historical values and industry peers helps determine if a stock is fairly valued. Based on this, Exxon is expected to perform in line with the market in the short term.

 

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