Exxon Signals Bullish Reversal On 16% y-o-y Rise In EPS

Exxon Signals Bullish Reversal On 16% y-o-y Rise In EPS
May 1, 2018

 
Exxon Mobil (NYSE: XOM) reported a 16% increase in fiscal 2018 first-quarter earnings and revenue compared with the similar period of fiscal 2017. However, the company missed earnings estimate of analysts. Still, considering the impressive results discussed below, we are anticipating a bullish reversal in the stock of the world’s largest publicly traded oil and gas company, which ended Monday’s trading at $77.75.

During 1Q18, total revenues increased to $68.21 billion, from $58.67 billion in 1Q17. The net income for the quarter ended March 2018 was $4.65 billion, an increase from $4.01 billion in the prior-year period. On a per share basis, the earnings in the recent quarter grew to $1.09, from $0.95 per share in the corresponding quarter last year. The Consensus estimate called for earnings of $1.13 per share on revenues of $67.20 billion. Despite a strong improvement in the earnings, compared with last year, the company failed to meet earnings expectations of analysts for the second quarter in a row.

The Irving, Texas-based company’s profits have increased over the past one year, reflecting a recovery in the oil market. Recently, crude prices have recorded their highest levels since the end of 2014. Following the strong growth in earnings and revenue, the management of Exxon stated that it would continue to focus on increasing the shareholder value.

Exxon posted an increase in the upstream earnings to $3.50 billion in Q1 2018, compared with $2.30 billion in the year-ago period. In particular, the US upstream segment swung to a profit of $429 million, from a loss of $18 million last year. The company’s downstream earnings were $940 million, a decrease from $1.10 billion during the first quarter of 2017. The poor performance of the company’s international business, higher expenses, weaker gains from the sales of assets and lower profit margins contributed to the sluggish performance of downstream business.

The chemical business reported a 14% y-o-y decline in profits. Oil equivalent production was 3.9 million barrels per day, down 6% from last year and weakest first quarter data since 1999. Adjusted production also slipped 3%. On the contrary, capital expenditures rose 16.7% to $4.867 billion.

The company has 27 rigs in the Permian Basin and four in the Bakken. Production has gone up by 18% in both regions during the past year. Exxon’s cash flow from operations and asset sales was $9.96 billion, up 12.4% from last year and the highest since 2014. Despite minor concerns, the company’s performance has improved considerably than last year. Therefore, fundamentally, the stock is expected to move up in the days ahead.

Technically, the stock has found strong support at 74.50. The positive reading of the MACD histogram reading also confirms the underlying bullishness in the stock. Therefore, we can expect the stock to move up in the short-term.

Exxon-Mobil - Technical Analysis - 1st May 2018

We wish to gain from the probable short-term bullish reversal in the stock price by placing a bet on a call option contract offered by a reliable binary broker. Before parking a portion of our surplus funds on a call option contract, we would make sure that the stock of Exxon Mobil trades near $76 in the NYSE. Furthermore, we would select a date around May 9th for the expiry of the contract.

Disclaimer: The trading analysis offered here is our opinion. It is not provided as trading advice, merely an indication of our trading plan. We cannot guarantee success and we encourage traders to incorporate a strong money management strategy to limit losses. Please use this article as part of your own research before formulating strategies prior to trading.

Janine

Janine

Janine is our editor for related stock market news. Andrew and Janine will be focusing on providing the latest trends and where the next hit could be


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