A Wall Street Journal report highlighted that Russia’s invasion of Ukraine and adverse weather conditions drove diesel prices to record premiums compared to crude and gasoline. Higher price realizations will likely support the uptrend in the share prices of refiners, including Exxon Mobil (NYSE:XOM) and Marathon Oil (NYSE:MRO).
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It’s worth highlighting that higher average prices have helped these companies to return solid cash to their shareholders (through dividends and buybacks) and reduce debt. Thanks to the improved operating environment, XOM and MRO stocks have gained about 92% and 94%, respectively, year-to-date.
The Wall Street Journal reveals that diesel prices gained 50% this year compared to a 14% rise in gasoline prices. While diesel prices could stay high, crude prices have cooled off a bit amid economic uncertainty. This indicates that the earnings of these companies could decline sequentially.
Is XOM Stock a Buy?
As stated above, analysts expect XOM to post earnings of $3.36 per share in Q4, down from the $4.45 reported in Q3. Nevertheless, XOM stock has received seven Buy and four Hold recommendations for a Moderate Buy consensus rating. Meanwhile, these analysts’ average price target of $116.45 implies 3.14% upside potential.
Our data shows that hedge funds sold 5.2M XOM stock last quarter. Further, insiders sold XOM stock worth $276.2K. XOM stock has a “Perfect 10” Smart Score on TipRanks, implying better prospects ahead.
Is MRO Stock a Buy or Sell?
Like XOM, MRO’s Q4 earnings could also witness a sequential decline due to lower crude prices. Wall Street expects Marathon Oil to deliver an EPS of $1.06, down from the $1.24 reported in the previous quarter.
Nevertheless, analysts are cautiously optimistic about MRO stock. It has received eight Buy, five Hold, and one Sell recommendations for a Moderate Buy consensus rating. These analysts’ average price target of $332.93 implies 4.71% upside potential.
Capitalizing on the appreciation in price, hedge funds sold 6.1M MRO stock last quarter. Further, insiders sold MRO stock worth $18.3M. Overall, MRO has a Smart Score of six on 10 on TipRanks, implying a Neutral outlook.
