Rounding out this week’s earnings, big oil giant Chevron (CVX – Free Report) is set to report earnings on Friday, January 27 with peer Exxon Mobil (XOM – Free Report) reporting next Tuesday, January 31.
Their quarterly reports are much anticipated as opinions are mixed regarding the upside left in these Oil & Energy conglomerates after their exceptional performances over the last several years.
Let’s take a look at what’s going on with both stocks before their Q4 releases which will give much-needed insight into the outlook for the broader Oil and Energy sector.
Sentiment
Generally, what goes up must come down, and this conundrum is starting to develop as Chevron and Exxon Mobil edge towards higher highs despite crude oil prices still well-off highs of over $120 a barrel, with crude oil Futures on the New York Mercantile Exchange (NYMEX) currently at $81 a barrel.
Despite crude oil prices remaining high relative to historical levels, Wall Street will be scoping the guidance and outlook that Chevron and Exxon Mobil provide and their insights should give a better idea of where oil prices could head.
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Q4 Preview & Outlook
Chevron’s Q4 earnings are projected at $4.16 per share, which would be a 62% increase from Q4 2021 EPS of $2.56 a share. Sales for the quarter are expected to be $52.27 billion, up 8% from the prior year quarter.
Rounding out the year, Chevron’s earnings are now forecasted to climb a very impressive 133% to $18.95 a share for fiscal 2022 compared to EPS of $8.13 in 2021. Earnings are expected to dip -17% for FY23 to $15.62 a share after a very tough year to follow.
Earnings estimate revisions have trended higher for FY22 but have declined for FY23. On the top line, sales are now forecasted to jump 48% in FY22 and then dip -8% in FY23 at $221.18 billion.
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Chevron Earnings ESP: The Zacks Surprise Prediction indicates Chevron could slightly beat quarterly expectations on its bottom line with the Zacks Consensus for Q4 EPS at $4.16 and the Most Accurate Consensus at $4.17 a share.
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Turning to Exxon Mobil, Q4 earnings are forecast at $3.32 per share and up 62% from EPS of $2.05 per share in Q4 2021. Sales are projected at $99.65 billion, a 17% increase from the prior year quarter.
Exxon is now expected to finish fiscal 2022 with EPS of $13.98 a share which would be a stellar 160% jump from FY21 earnings of $5.38 a share. Fiscal 2023 earnings are anticipated at $10.03 per share, dropping -28% after an exceptional year.
The earnings estimate revisions trend is the same for Exxon, with FY22 EPS estimates going up but FY23 estimates decreasing over the last 90 days. Exxon sales are now forecasted to jump 46% in FY22 followed by a -12% drop in FY23 to $366.59 billion.
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Exxon Earnings ESP: With the Zacks Consensus and the Most Accurate Consensus both at $3.32 per share Exxon is expected to reach its bottom line expectations for the fourth quarter.
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Performance & Valuation
In the last year, Exxon Mobil stock is up +53% Vs. Chevron’s +36%, with both crushing the S&P 500’s -8% decline. Both CVX and XOM stocks have also outperformed the Oil & Gas Integrated Markets +28%.
More impressive, over the last three years following the post-pandemic recovery in crude oil prices, XOM’s total return including dividends is now +113% with CVX at +93% to also beat the benchmark’s +31% and their Zack Subindustry’s +60% .
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Trading around $185 per share and 11.4X forward earnings, Chevron stock trades well below its absurd decade highs and at a 35% discount to the median of 17.6X.
Similarly, trading at $116 a share and 11.2X forward earnings, Exxon Mobil stock trades nicely below its own extreme decade high of 349.5X and 37% beneath the median of 17.7X.
Dividends & Buybacks
Shares of Chevron are up roughly 4% on Thursday on news that the company will increase its budget for buybacks to $75 billion upon robust profits. This now tops Exxon Mobil’s $50 billion share repurchase plan through 2024.
Chevron announced it will increase its quarterly dividend amount by 6% ($0.09) to $1.51 per share with its annual yield currently at 3.17%, which is slightly below Exxon Mobil’s 3.22%.
Both dividends are stellar and easily top the S&P 500’s 1.55% average dividend yield and are on par with the industry average of 3.18%.
Image Source: Zacks Investment Research
Bottom line
Both Chevron and Exxon Mobil stock land a Zacks Rank #3 (Hold) at the moment. Although earnings estimate revisions are trending down for the two oil giants’ fiscal 2023, their bottom lines are still expected to be strong.
When considering the stellar dividends Chevron and Exxon Mobil provide along with their attractive valuations’ investors may continue to be rewarded for holding these stocks, but their outlook and guidance during the Q4 reports will be a large indicator of any further upside.
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