Energy Majors ExxonMobile and Chevron Report Earnings

Oil Majors’ ExxonMobile (Ticker Symbol: XOM) and Chevron (Ticker Symbol: CVX) reported quarterly results on earnings and revenue last week on Friday. ExxonMobile reported an earnings per share miss of .55 cents vs. Wall Street analysts’ expectations of .70 cents.  Revenues also came in less than expected with a total of $63.63 billion vs. analysts expectations of $64.82 billion, which was down over 6% from a year ago. First quarter profits were lower, led by a lackluster performance in its downstream business, which focuses on refining oil into products such as gasoline, heating oil, and diesel.  On a positive note for shareholders, ExxonMobile did raise its quarterly dividend by .05 cents to .87 per share.

ExxonMobile had a tough start to 2018.  After attempting to stay positive in the first quarter, ExxonMobil had a poor earnings and revenue release that sent the stock gapping lower.  Early in the second quarter, the stock found a temporary bottom, forming a bullish divergence pattern, where the stock makes a lower low in price but the Relative Strength Index makes a higher low. (As indicated on the chart by the purple circles) The stock went on a 20% move higher over the next two quarters before failing to break out above its 2018 highs and selling off sharply lower into the beginning of 2019.  ExxonMobile had a positive start to 2019 rallying over 20% in the first two quarters. Currently, the stock is finding support just above its 200-Day Moving Average around $79.00.

(Chart above courtesy of ​www.tipranks.com​)  

Based on a survey of 14 analysts offering 12-month price targets, the average price target for ExxonMobile’s stock is $86.00. According to that number, the stock is priced at a discount relative to Wall Street’s analysts and could be considered undervalued around current levels near $79.97.

Chevron reported an earnings per share beat of $1.39 vs. Wall Street analysts expectations. $1.30 per share.  Revenue came in less than expected at $35.19 billion vs. Wall Street analysts’ expectations of $38.43 billion, which was down 5% from last year.  Similar to ExxonMobile, Chevron had poor performance in its downstream business which had a negative effect on its revenue. The oil giant did announce that it had plans to double its production from its Permian Basin assets by 2023.  Chevron left its dividend unchanged from last quarter at $1.19 per share.

Chevron stock ticked to an all-time high on July 21st, 2014 at a price of $135.10. Over the course of the next year, the price of crude oil dropped over 50% sending shares of Chevron shares significantly lower, putting in its first oversold condition on its weekly chart since 2009.  The shares have been in recovery mode over the past 3 years rallying at one point as much as 85% from the 2015 lows. Currently, the stock is finding support above its 100-week Moving Average around $117.50

(Chart above courtesy of ​www.tipranks.com​)  

Based on a survey of 14 analysts offering 12-month price targets, the average price target for Chevron’s stock is $139.58. According to that number, the stock is priced at a discount relative to Wall Street’s analysts and could be considered undervalued around current levels near $121.37.

ExxonMobile and Chevron both reported lower than expected revenues due to lower refining margins. Analysts’ are stating this is a result of the fracking boom and is an underlying structural change in the industry.  Crude oil has had a very positive start the year in 2019 rallying over 20%, which could help future profit margins for the energy giants in the upcoming quarters. We’ll be watching the weekly chart down trendline in XOM since July of 2014 to April of 2019 for signs of a fresh trendline failure or breakout opportunity above those levels.


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