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ExxonMobil’s Earnings to Fall the Most among Its Peers

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ExxonMobil’s earnings estimate

ExxonMobil’s (XOM) earnings are expected to fall 18% to $4.0 in 2019, the highest expected fall in earnings among its peers. Suncor Energy (SU), Royal Dutch Shell (RDS.A), and Total (TOT) are expected to post 26%, 8%, and 7% rises in their earnings, respectively, in 2019.

However, Chevron’s (CVX) and BP’s (BP) earnings could fall 3% and 8%, respectively, in the year.

In the second quarter of 2019, ExxonMobil is expected to post EPS of $1.0, up ~6% year-over-year.

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Though the company’s growth estimate looks weak for the year, ExxonMobil has a promising upstream portfolio, which could bring in long-term growth. The critical upstream assets expected to bring in growth include shale and tight assets in the US and deepwater projects in Guyana and Brazil. Further, ExxonMobil’s low-cost LNG (liquefied natural gas) assets are getting all set to tap growing global demand. The company plans to begin new LNG projects in Papua New Guinea and Mozambique.

Valuations and dividends

ExxonMobil is trading at a forward PE of 15.8x, higher than the peer average of 12.1x. XOM is trading at higher valuations likely due to its sound debt and cash flow position.

Further, ExxonMobil’s dividend yield stands at 4.7%, below the peer average of 5.1%. The company paid $3.5 billion in dividends in the first quarter. ExxonMobil has been paying consistent and growing dividends for almost 36 years. The company expects to continue this practice in the years to come.

Overall, ExxonMobil is a sound company with high valuations. However, the company has a relatively low dividend yield and is expected to see a fall in its earnings in 2019.

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