Exxon Mobil Corporation (XOM) delivered mixed third-quarter results with earnings exceeding and revenue missing expectations. The results reflect XOM’s efficient cost control measures, solid operations, as well as increased realizations, and higher fuel demand. Shares rose as much as 1.6% before closing flat at $64.47 on October 29.
XOM is one of the world’s largest publicly traded international oil and gas companies and engages in the exploration, development, and distribution of oil, gas, and petroleum products. With a market cap of $272.94 billion, shares have gained 89.7% over the past year. (See Insiders’ Hot Stocks on TipRanks)
The company posted adjusted earnings of $1.58 per share, meaningfully higher than analyst estimates of $1.53 per share. In the prior-year quarter, XOM posted an adjusted loss of $0.18 per share.
Further, Q3 total revenue and other income stood at $73.79 billion, up 59.7% year-over-year, but failed to meet the consensus estimate of $75.35 billion.
The robust revenue growth was attributed to higher pricing and volume mix. XOM also produced 3.66 billion oil-equivalent barrels per day in Q3, a 4% increase year-over-year excluding special items.
Moreover, in Q3, XOM undertook capital and exploration expenses of $3.85 billion, driven by continued strategic investments in Guyana and Permian Basin as well as in Chemical. The company also paid back debt of $4 billion, thereby improving its total debt-to-capital ratio to 25%.
Commenting on the results, Darren Woods, Chairman and CEO of XOM said, “We expect to increase the level of spend in lower-emission energy solutions by four times over the prior plan, adding projects with strong returns as well as seeding some development investment in large hub projects that require further policy support.”
Woods added, “Retaining flexibility to strike a balance across our different investment opportunities, while maintaining a strong balance sheet, is critical to ensure our business produces accretive, long-term returns and remains resilient under a wide range of future scenarios.”
For full-year fiscal 2021, Exxon expects to undertake capital spending of around $20-$25 billion. The company also expects to increase its share buyback program to up to $10 billion starting in 2022.
In response to Exxon Mobil’s quarterly performance, RBC Capital analyst Biraj Borkhataria maintained a Sell rating on the stock with a price target of $65, implying that shares are almost fully valued at current levels.
Overall, the stock has a Hold consensus rating based on 3 Buys, 4 Holds, and 2 Sells. The average Exxon Mobil price target of $70.17 implies 8.84% upside potential to current levels.