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Exxon Mobil stock, fueled by ‘favourable market’, has $30 billion war chest and record profits

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Exxon Mobil stock

Exxon Mobil (XOM) released mixed financial results for the fourth quarter on Tuesday, beating earnings estimates but missing revenue views. The energy giant, fueled by a “favorable market”, announced record profits in 2022 and its highest annual revenue since 2013. Exxon Mobil shares fell slightly on Tuesday.

XOM Stocks: Earnings

Estimates: Analysts had forecast earnings growth of 60% to $3.29 per share and targeted a 15% increase in sales to $97.35 billion. For the full year, Wall Street predicted an EPS increase of 158% to $13.92. This would surpass the previous record high of $8.47 in 2008. Revenue forecasts see a 50% jump to $425.94 billion.

Earnings: Exxon Mobil reported EPS growth of 66% to $3.40 while revenue jumped 12% to $95.43. In 2022, Exxon Mobil’s earnings skyrocketed 160% to $14.06 per share. Sales edged up 45% to $413.68 billion.

The energy giant’s free cash flow was $62.1 billion in 2022, an increase of nearly $23 billion. Exxon Mobil returned a total of $29.8 billion to shareholders in the form of dividends and buybacks. The company added that it would return up to $35 billion to shareholders in 2023.

Exxon Mobil CEO Darren Woods said in a statement on Tuesday that the company “clearly benefited from a favorable market” in 2022.

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“Our 2023 plan calls for further progress on our strategic goals, which include industry leadership in safety, operations and financial performance,” Woods said.

The five-year plan

Exxon Mobil had already announced its five-year business plan in early December, indicating that it expected to maintain annual capital expenditures between $20 billion and $25 billion through 2027. The oil giant also plans to increase its program of $50 billion share buyback through 2024. .

Investors will also have an eye on the company’s cash balance. Exxon reported $29.7 billion at the end of the fourth quarter, after recording $30.4 billion at the end of the third quarter, up nearly 350% from the $6.8 billion reported in the beginning of the year.

In addition to maintaining its annual level of capital spending through 2027, Exxon Mobil also plans to increase its carbon reduction investments to approximately $17 billion over the same period. This represents an increase of nearly 15% over current levels. Exxon’s capital investments in 2023 will be in the range of $23 billion to $25 billion.

The company expects earnings and cash flow to double by 2027, compared to 2019. Earnings for the full year 2019 were $2.25 per share. Cash flow from operations in 2019 was $29.7 billion.

“Favorable market” in 2022 for oil and gas

In 2022, as the US economy recovered from the Covid pandemic, Russia invaded Ukraine in February, sending oil, gasoline and natural gas prices skyrocketing. This prompted Exxon Mobil and Chevron (CVX) and other energy stocks lead the stock market as companies post record profits.

Exxon Mobil has posted an average EPS growth rate of 225% over the past three quarters. In the third quarter, Exxon Mobil and Chevron reported combined net income of more than $30 billion in the third quarter. Irving, Texas-based Exxon Mobil posted the highest quarterly profit in its 152-year history.

On Friday, Chevron missed earnings views while beating revenue estimates. This followed an earlier announcement launching a massive $75 billion share buyback and increasing its dividend.

Throughout 2022, President Joe Biden has criticized Exxon Mobil, Chevron and several other major producers for choosing to focus on returning cash to shareholders instead of spending to increase production.

On Friday evening, Deputy White House Press Secretary Abdullah Hasan tweeted that “Companies clearly have everything they need – record profits and thousands of approved permits – to ramp up production.”

“The only thing that bothers them is their own decision to keep pumping windfall profits into the pockets of executives,” Hassan wrote.

The oil market

Ministers from the Organization of the Petroleum Exporting Countries and its allies, including Russia (OPEC+) will meet on Wednesday. The Joint Ministerial Monitoring Committee examines the oil market but does not have the power to modify production quotas. However, ministers are expected to discuss possible policy adjustments this week.

U.S. crude oil futures fell about 1% to $77.06 a barrel on Tuesday. Last week, US crude had found support above its 50-day moving average, after stabilizing above that line early last week for the first time since mid-November.

This followed optimistic oil demand forecasts from the International Energy Agency (IEA) and OPEC.

The IEA estimates that the recent easing of Covid restrictions in China will drive global oil demand in 2023 to record highs. The news sent US benchmark oil and UK benchmark Brent crude to their highest levels since early December. Estimates from the IEA based in Paris, France, predict that the reopening of China will drive global oil demand to a record high of 101.7 million barrels per day (bpd) in 2023, up 1, 9 million bpd compared to 2022.

ExxonMobil Stocks

Exxon Mobil stock fell 0.7% on Tuesday in pre-trade. On Monday, the shares edged down 1.7% to 113.61. The stock has formed a flat base and is around 1% up from a buy point of 114.76. Stocks tracked the S&P 500 for much of January.

ExxonMobil stock ranks 3rd in the oil and gas integrated industry group. XOM stock has a composite rating of 97 out of 99. The stock has a relative strength rating of 90, an IBD stock proprietary check gauge for stock price movement. The EPS rating is 80.

Please follow Kit Norton on Twitter @KitNorton for more coverage.


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