ExxonMobil’s 2Q15 earnings release and returns
ExxonMobil Corporation (XOM) is scheduled to release its 2Q15 earnings on July 31. Its stock closed at $83.11 on July 14. Analyzing ExxonMobil Corporation’s returns since January 1 this year, we can see that it returned about -9%. ExxonMobil’s returns have consistently been negative in 2015, as the graph below notes.
ExxonMobil’s peer performance
British energy major BP Plc. (BP) has outperformed most of the integrated players in the industry, returning ~8% since the beginning of the year. YPF S.A. (YPF), the Argentina-based integrated energy company, also outperformed XOM but returned -1.3% YTD.
Royal Dutch Shell (RDS.A), the integrated oil and gas heavyweight, underperformed ExxonMobil with a -12.7% YTD return. Chevron Corporation (CVX), a Houston-based American integrated company, underperformed all its integrated peers in our group, with a year-to-date return of -14%.
This shows that investors seem to be cautious about ExxonMobil’s performance, led by the weakness in commodity prices.
Why energy stock returns have been weak
Most energy stocks have tumbled since June 2014, when crude oil started to crash. This negatively affected oil producers’ revenues and margins. Many energy companies cut expansion investment. The US oil rig count has slumped since September last year. Approximately 56% of these rigs have been idled since September. This also explains why industry ETF XLE’s returns have been poor. The downstream industry, on the other hand, has benefited from lower crude oil prices. We’ll discuss this in more detail later in this series.
In the following parts of this series, we’ll analyze ExxonMobil’s 2Q15 earnings and revenues versus analysts’ estimates.