ExxonMobil's Q1 Earnings on Deck: Should You Stay Invested or Exit?

Exxon Mobil Corporation XOM is set to report first-quarter 2025 results on May 2, before the opening bell.

The Zacks Consensus Estimate for first-quarter earnings is pegged at $1.72 per share, implying a decline of 16.5% from the year-ago reported number.  It witnessed one downward estimate movement versus four upward revisions in the past 30 days. The Zacks Consensus Estimate for first-quarter revenues is currently pegged at $84.5 billion, suggesting a 1.7% uptick from the year-ago actuals.

XOM beat the consensus estimate for earnings in three of the trailing four quarters and missed the same once, with the average surprise being 1.8%. This is depicted in the graph below:  

Q1 Earnings Whispers for XOM

Our proven model predicts an earnings beat for XOM this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy), or 3 (Hold) increases the chances of an earnings beat. That is the case here.

The leading integrated energy player has an Earnings ESP of +1.62%. XOM currently carries a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

XOM’s Factors to Note

XOM reported in a Form 8-K that it expects its upstream earnings for the March quarter to increase sequentially by as much as $800 million. The company attributed the improvement to advantageous oil and gas prices. This projection seems reasonable, given that crude oil prices were handsome in the first quarter of 2025. According to the U.S. Energy Information Administration (“EIA”), the monthly average WTI spot prices for January, February and March 2025 were $75.74, $71.53, and $68.24 per barrel, significantly higher than break-even oil prices in the shale plays.

Moreover, ExxonMobil expects its Energy Products business unit to witness a sequential improvement of $300-$700 million owing to the changes in industry margins.

XOM’s Price Performance & Valuation

XOM's stock has slipped 3.4% over the past year compared with the industry’s fall of 9.1%. BP plc BP, another integrated energy major, has plummeted 22.3% over the same time frame, while Chevron Corporation CVX, in the same space, has fallen 9%.

One-Year Price Chart

Since the prices of BP, Chevron and the broader industry have declined more than ExxonMobil, XOM now appears relatively overvalued. The company's current trailing 12-month enterprise value/earnings before interest, tax, depreciation and amortization (EV/EBITDA) ratio is 6.76, reflecting that it is trading at a premium compared to the industry average of 4.02.

Investment Thesis of XOM

The acquisition of Pioneer Natural Resources boosts ExxonMobil's production capabilities in the Permian Basin, one of the most profitable regions in the United States due to its exceptionally low production costs. The integrated energy major also has a strong pipeline of projects encompassing offshore Guyana assets, also known for low-cost structures.

XOM is well known for better utilization of invested funds and has a strong balance sheet. Hence, the energy major can rely on its solid financials to sail through an unfavorable business environment. Also, investing in alternative energy, such as carbon capture and lithium battery technology, offers potential growth opportunities for ExxonMobil. However, these projects require substantial capital and carry uncertain returns in the short term. Moreover, the company’s business is highly exposed to volatile oil and natural gas prices.

Status of Other Big Energy Players: CVX, BP

Like XOM, Chevron will also report first-quarter 2025 earnings on May 2. CVX currently has an Earnings ESP of -5.51% and a Zacks Rank of 3. (Find the latest EPS estimates and surprises on Zacks Earnings Calendar.)

Chevron's earnings beat the Zacks Consensus Estimate in two of the trailing four quarters, and missed the same twice, with the average negative surprise being 3.15%.

BP, on the other hand, has already reported results. BP announced first-quarter 2025 adjusted earnings of 53 cents per American Depositary Share on a replacement-cost basis, excluding non-operating items. The figure lagged the Zacks Consensus Estimate of 56 cents. The bottom line also declined from the year-ago reported figure of 97 cents.

Total quarterly revenues of $47.9 billion lagged the Zacks Consensus Estimate of $57.2 billion and declined from $49.9 billion reported a year ago. For more details, see: BP's Q1 Earnings & Revenues Miss Estimates on Weak Refining.

Last Word

Considering the backdrop, it might be wise for investors to wait for a more favorable entry point, as the company is currently somewhat overvalued. Those who own XOM stock may hold on to it to benefit from its long-term growth prospects.

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This article originally published on Zacks Investment Research (zacks.com).

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