Oil giant ExxonMobil (Ticker Symbol: XOM) reported quarterly earnings and revenue that beat on the top and bottom lines. ExxonMobil reported an earnings per share beat of .75 cents vs. Wall Street analysts’ expectations of .67 cents. Revenue also came in better than expected with a total of $65.05 billion vs. Wall Street analysts’ expectations of $64.79 billion.
However, Exxon’s upstream income came in less than expected at $2.17 billion vs. Wall Street expectations of $2.36 billion. The company’s downstream income was better than analysts’ projections at $1.23 billion vs. the 1.0 billion that Wall Street was expecting. Additionally, Exxon’s chemicals income was also better than expected at $241 million vs. the $223.6 million that Wall Street was expecting.
The above image is a chart of Exxon’s stock since the beginning of 2019. The stock started off in the first quarter with a bang, coming off an extremely oversold condition in its Relative Strength index. Exxon rallied in the first and second quarters nearly 25% led by a strong earnings release in the first quarter. The stock found some price resistance right around the $84.00 price level while forming a bearish divergence, where the stock makes a higher high in price but the RSI makes a lower high. Traders often use this pattern to determine when a trend may be coming to an end, as occurred in Exxon’s case.
Exxon proceeded to pull back nearly 15% into the third quarter, had a small rally, and found some dynamic price resistance at its 100-day moving average. The stock continued to sell-off eventually forming a double bottom reversal pattern. Double bottoms occur when the price of a stock reaches a low price, has a small rally, then retests that low failing to break below it. The pattern is confirmed once it breaks above the high between the two prior lows. Exxon broke from that pattern, had a small rally, and has continued to trade sideways since then.
Traders who are bullish on Exxon should watch the MACD buy signal and its crossing of the zero-line, along with a move above $73.00, for a possible run at the upper end of the trading range around $76.00.
Traders who are bearish on Exxon should watch for a potential move back below its earnings day low around $68.25 for a possible move down to the lower end of the trading range around $66.00.
(Chart above courtesy of www.tipranks.com)
Based on a survey of 14 analysts offering 12-month price targets, the average price target for ExxonMobil’s stock is $77.62. 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 $69.35.
Investors in the oil space should look to Exxon’s next earnings release on February 2nd for fresh news within the sector.