Here is What to Know Beyond Why Exxon Mobil Corporation (XOM) is a Trending Stock

Exxon Mobil (XOM) is trending on Zacks.com, but faces near-term headwinds. The stock has underperformed the S&P 500 over the past month, and earnings estimates for the current quarter and fiscal year have been revised downwards by -9.5% and -3.9% respectively, leading to a Zacks Rank #4 (Sell) rating; revenue estimates also indicate year-over-year declines for the current quarter and fiscal year.

Analysis

Exxon Mobil Corporation (XOM) has recently underperformed, with its shares returning -3.8% over the past month, contrasting sharply with the S&P 500 composite's +6.3% gain, while its industry, the Zacks Oil and Gas - Integrated - International, remained unchanged. This underperformance is contextualized by significant downward revisions in earnings estimates. For the current quarter, Exxon is anticipated to post earnings of $1.47 per share, a substantial -31.3% decrease year-over-year, with the Zacks Consensus Estimate for this period declining by -9.5% in the last 30 days. Similarly, the consensus earnings estimate for the current fiscal year stands at $6.11, representing a -21.6% year-over-year change, and this estimate has been revised downwards by -3.9% over the past month. While the next fiscal year projects a +17.1% earnings growth to $7.15 per share, this estimate has also seen a negative revision of -5.7% recently. Consequently, Exxon holds a Zacks Rank #4 (Sell), signaling potential near-term underperformance. Revenue forecasts further underscore these headwinds, with an expected -12.3% year-over-year decline in sales to $81.62 billion for the current quarter, and projected revenue decreases of -5.9% for the current fiscal year and -0.3% for the next. In its last reported quarter, Exxon's revenues of $83.13 billion missed consensus by -1.22%, though EPS of $1.76 did beat estimates by +1.15%. The company has a track record of beating EPS estimates in the past four quarters but has only surpassed revenue estimates once in that period. Valuation-wise, Exxon is graded 'C' by Zacks Value Style Score, suggesting it trades at par with its peers.

Key Decisions for Investors

• Given the significant downward revisions in earnings estimates for the current quarter and fiscal year, coupled with a Zacks Rank #4 (Sell), investors should exercise caution regarding XOM's near-term stock performance.
• Closely monitor upcoming earnings reports and any further revisions to consensus estimates, particularly for signs of stabilization or improvement in revenue and earnings outlook, which are currently projected to decline year-over-year.
• While the projected +17.1% earnings growth for the next fiscal year offers a potential longer-term positive, the recent -5.7% downward revision to this estimate warrants careful observation before considering it a firm recovery signal.
• Acknowledge that the 'C' grade for valuation suggests the stock is currently trading in line with its peers, implying that downside may be driven more by fundamental estimate revisions than overvaluation.