Oil and gas giant Exxon Mobil (NYSE:XOM) is scheduled to announce its second-quarter results on Friday, July 28. Energy prices have cooled down this year compared to 2022, when they spiked due to the Russia-Ukraine war and drove record earnings for major oil companies. Analysts’ consensus estimate indicates a sharp decline in Exxon’s Q2 2023 earnings based on the update provided by the company in early July.
Exxon’s Q2 Earnings Expected to Fall
Exxon reported better-than-anticipated earnings for the first quarter, as higher production helped in offsetting the pullback in oil and gas prices. The first-quarter adjusted EPS increased 37% year-over-year to $2.83.
However, an update provided by the company earlier this month indicated pressure on Q2 upstream earnings due to lower natural gas prices. Additionally, weaker refining margins are projected to adversely impact Q2 downstream earnings.
Accordingly, analysts expect the company’s Q2 2023 adjusted EPS to decline about 51% year-over-year to $2.04. Revenue is expected to plunge to almost $82 billion from $115.7 billion in the prior-year quarter. Rival Chevron (NYSE:CVX) announced its preliminary Q2 numbers this week, which reflected a 47% slump in its adjusted EPS. Nonetheless, CVX’s Q2 adjusted EPS managed to surpass Wall Street’s expectations.
Heading into the Q2 print, Truist analyst Neal Dingmann lowered his price target for Exxon Mobil to $110 from $118 and reiterated a Hold rating. Commenting on the Q2 earnings of the exploration and production sector, the analyst said that while a number of companies are continuing to increase production to new record levels, free cash flow for most operators is expected to decline by over 50%, given significantly lower commodity prices.
Nevertheless, Dingmann continues to have an overweight stance on the broader sector due to low trading multiples, attractive cash flow yields, and strong balance sheets.
Technical Indicators Ahead of XOM’s Q2 Earnings
Ahead of the Q2 results, technical indicators reveal that Exxon is a Buy. According to TipRanks’ easy-to-understand technical tool, XOM’s 50-Day EMA (exponential moving average) is 105.36, while its price is $105.09, making it a Buy. Further, XOM’s shorter duration EMA (20-day) also signals that it is a Buy.
What is the Prediction for Exxon Stock?
Wall Street is cautiously optimistic on Exxon, with a Moderate Buy consensus rating based on nine Buys and seven Holds. The average price target of $124.60 implies about 19% upside. Shares have declined nearly 5% so far in 2022. Exxon is a dividend aristocrat offering a yield of 3.4%.
Insights from Options Trading Activity
TipRanks now presents options activity to help investors plan their trades ahead of earnings releases. Options traders are pricing in a 2.36% move on Exxon Mobil earnings. XOM shares have averaged a 1.6% move in the last eight quarters. In particular, the stock rose 1.3% in reaction to Q1 2023 results.
The anticipated move is determined by computing the at-the-money straddle of the options closest to the expiration after the earnings announcement.
