ExxonMobil’s 3Q15 earnings release and returns
ExxonMobil (XOM) is scheduled to release its 3Q15 earnings on October 30, 2015. Its stock closed at $79.30 on October 12.
By analyzing ExxonMobil’s returns since January 1 this year, we can see that it returned approximately -12%.
ExxonMobil’s returns have consistently been negative in 2015, as the above graph shows.
ExxonMobil underperformed the Energy Select Sector SPDR ETF (XLE). XLE has returned approximately -11% YTD (year-to-date). ExxonMobil accounts for 16.2% of XLE. Dutch energy major Royal Dutch Shell (RDS.A) underperformed many of the integrated players in the industry. It returned approximately -14% since the beginning of the year.
Why energy stock’s returns have been weak
Most energy stocks have fallen since June 2014 when crude oil started to crash. This negatively affected oil producers’ revenue and margins. Many energy companies cut expansion investment. The US oil rig count fell since September last year. YTD, ~54% rigs have been idled. This also explains why XLE’s returns have been poor.
In contrast, the downstream industry benefited from lower crude oil prices. XOM has substantial downstream operations. However, investors seem to be cautious about ExxonMobil’s performance—led by the weakness in commodity prices. We’ll discuss this in more detail later in this series.
In the next part of this series, we’ll analyze ExxonMobil’s earnings performance versus analysts’ estimates.