With Exxon expected to announce 1st quarter earnings on Thursday, investors eagerly want to hear how the company is dealing with the drop in oil prices.
Exxon Mobil Corp. (NYSE: XON) is expected to report its earnings for the first-quarter on Thursday before the bell.
As investors predict that the drop in oil prices will continue, they eagerly await to hear how the company is dealing with the low oil prices. Investors are also welcoming Exxon’s updates on new projects and capital expenditure plans.
During the oil price slump, Exxon and others took a good look at their budgets. Earlier in the year, the company stated that it would reduce its capital expenditure plans to $34 billion indicating a 12% cut. Exxon further stated that in a bid to save money, they would reduce on share buy-backs.
According to Wall Street expectations, oil will continue to come under pressure throughout the first half of 2015. Although recently oil prices have recovered slightly, it is still down almost 50% from the July 2014 peak.
Attributing to the decline in oil are both the slower demand and the oversupply, aggravated further by OPEC (Organization of the Petroleum Exporting Countries) who decided to stay put on production to preserve their market share.
Based on FactSet analysts, Exxon is expected to report 82 cents a share earnings in the first-quarter down from $2.10 a share in the same period last year. These analysts also expect a drop in sales from $106.77 billion last year to $53.63 billion in the 1st-quarter.
In the last 12 months, Exxon shares have declined almost 14% and 0.6% in the past three months. That is compared to almost 10% gains for the Dow Jones Industrial Average (DJIA) during the past 12 months and 5% within the past three months.
Many analysts rate Exxon stock a hold, more commonly preferring rival company Chevron Corp. (NYSE: CVX) on the strength of its product mix and expected production. FactSet analysts also put the price target for Exxon at $94.06 a share, roughly 8% above its current levels.
A Capital IQ analyst, Steward Glickman said that he’d be quite interested in hearing the company’s perspective on the current oil price slump and also whether Exxon will maintain its production goals. He further added that he feels they will maintain production levels, also suggesting that the market may see a longer period of depressed oil prices. Meanwhile, in some ways, Exxon could benefit from the lower oil prices regarding acquisitions, said Glickman. In 2009, Exxon bought XTO Energy Inc. for $31 billion and the company has not made any big acquisitions since then.
MT4 Chart: Exxon
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