U.S. energy behemoth ExxonMobil Corporation (XOM) is scheduled to report its fourth quarter and full year 2011 results on January 31, 2012, before the opening bell.
The Zacks Consensus Estimate for the upcoming quarter is a profit of $2.01 per share on revenues of $110.4 billion. For the full year, our earnings per share projection is $8.46 on revenues of $470.1 billion.
Third Quarter 2011 Recap
ExxonMobil reported better-than-expected third-quarter 2011 results with earnings per share of $2.13 per share, showing a substantial improvement from the year-earlier earnings of $1.44 and ahead of the Zacks Consensus Estimate of $2.11.
Total revenue in the quarter registered a nearly 32% year-over-year improvement to $125.3 billion, comfortably surpassing the Zacks Consensus Estimate of $115.7 billion.
(Read our full coverage on this earnings report: Exxon Outperforms in 3Q)
Agreement of Analysts
Analysts exhibit a cautious sentiment for ExxonMobil in the upcoming quarter based on its gas/oil price volatility, reserve replacement difficulties, project delays and weak macro backdrop.
For the fourth quarter, out of the 15 analysts covering the stock, nine analysts have lowered their estimates, while only one has raised the same in the last 30 days. In the last 7 days, only one analyst has revised his estimate downward and one analyst has moved in the opposite direction.
For fiscal 2011, 10 analysts (out of 17 analysts) decreased their estimates while three analysts have increased the projection over the past one month. In the last seven days, two analysts have lowered the estimates and one analyst has moved in the opposite direction.
Magnitude of Estimate Revisions
Considering the analysts’ earnings revision, the Zacks Consensus Estimate for the fourth quarter dropped to $2.01 from $2.13 recorded 30 days back. For the full year, estimate went down to $8.46 from $8.56, over the last one month.
About a week ago, the estimates were $2.00 and $8.46 for the quarter and year, respectively.
Surprise History
The company has a history of mixed earnings surprises, surpassing/lagging the Zacks Consensus Estimate in each of the last 4 quarters. The company recorded a minimum surprise of negative 7.23% in second quarter 2011 to a maximum of 17.09% in fourth quarter 2010. On an average, the earnings surprise stood at 3.80%.
Our Recommendation
ExxonMobil shares currently retain a Zacks #3 Rank, which translates into a short-term Hold rating. We are also maintaining our long-term Neutral recommendation on the stock.
We believe that ExxonMobil is the world’s best-run integrated oil company given its track record of superior return on capital employed. The company boasts diversified operations across the world with several new projects coming online through 2013. Significant exploration successes – with key wells in the Gulf of Mexico (GoM), the Black Sea, Tanzania and Argentina – are believed to be major catalysts going forward. New volume additions are also expected from U.S., Canada, Kazakhstan, Nigeria, Australia, Russia, Angola and Iraq in the coming quarters.
However, as access to new energy resources becomes more difficult, ExxonMobil, like most of its peers, will face headwinds to replace its reserve. Given its large base, achieving growth in oil and natural gas production has been a challenge for the company over the last several years.
Another prominent energy firm, Valero Energy Corporation (VLO) will also report its fourth quarter earnings tomorrow.
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