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Why Did ExxonMobil’s 2Q15 Earnings Fall Short of Expectations?

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Quarterly earnings per share versus estimates

The 2Q15 adjusted EPS for ExxonMobil (XOM) was $1.00, ~9% lower than the consensus sell-side analysts’ EPS (earnings per share) estimate of $1.11. Adjusted earnings exclude various one-time charges. ExxonMobil’s 2Q15 earnings from upstream operations were weak, which led the company to fall short of 2Q15 expectations.

Between 2Q12 and 2Q15, ExxonMobil’s adjusted EPS has decreased 44%. It decreased 51% from 2Q14 to 2Q15. The fall in crude oil prices has crushed earnings from upstream operations, which affected XOM negatively. We’ll analyze why XOM’s upstream segment lagged in the following part.

As noted in the graph above, ExxonMobil’s adjusted EPS exceeded estimates in many quarters in the past. On average, adjusted EPS has beat consensus EPS by ~1% in the past 13 quarters.

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Quarterly revenues versus consensus

ExxonMobil’s 2Q15 revenues beat Wall Street analysts’ consensus estimates. The company’s 2Q15 adjusted revenue of $74.11 billion was 11% higher than the consensus sell-side analysts’ revenue estimate of $66.77 billion.

On average, adjusted revenues have fallen short of consensus revenues by ~5% in the past 13 quarters. Between 2Q12 and 2Q15, ExxonMobil’s adjusted revenues have decreased 42%. Adjusted revenues decreased by 34% from 2Q14 to 2Q15.

Share price down on earnings

ExxonMobil released its financial information for 2Q15 on July 31, 2015. Its stock reacted negatively immediately following the earnings release. On the following day, the stock fell 1.5% to $78.06 from the previous day’s close. Since the beginning of this year, ExxonMobil’s share price has fallen 17%.

In comparison, Cenovus Energy’s (CVE) share price has fallen by 31% since the beginning of the year, Suncor Energy’s (SU) share price has fallen by 11%, and Royal Dutch Shell’s (RDS.A) share price has fallen by 14%. ExxonMobil makes up 15.7% of the Energy Select Sector SPDR (XLE). XLE has fallen 16% during the same period.

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