ExxonMobil (XOM) and Chevron (CVX) are both expected to post dull numbers in the third quarter. However, on a comparative basis, we’ll review which of these integrated energy companies could post better results. The companies are scheduled to report their third-quarter earnings on November 1.
ExxonMobil and Chevron’s earnings
In the third quarter, analysts expect both of the companies’ earnings to fall.
Analysts expect Chevron’s EPS to fall 21% YoY (year-over-year) to $1.68 in the third quarter. Analysts also expect the company’s third-quarter EPS to fall 5% sequentially. Notably, analysts expect Chevron’s revenues to fall 9% YoY to $40.1 billion in the third quarter.
Analysts expect ExxonMobil’s EPS to fall 50% YoY to $0.74 in the third quarter. However, analysts expect the company’s EPS to rise 1% sequentially. They expect the company’s revenues to fall 14% YoY to $66.2 billion in the third quarter.
Oil prices fell about 8% in the third quarter. Brent prices fell 18% YoY to $62 per barrel in the quarter. Similarly, WTI prices fell 19% YoY to $56 per barrel. Lower oil prices would have impacted both companies’ upstream realizations and earnings in the third quarter.
Comparing ExxonMobil and Chevron
Analysts expect Chevron’s earnings to fall more than ExxonMobil YoY in the third quarter. The different expectations could be due to the companies’ upstream volumes. CVX’s upstream production has been rising to new highs in the past few quarters. However, ExxonMobil’s upstream portfolio is skewed for long-term growth. To learn more, read ExxonMobil and Chevron: Upstream Portfolio Positioning.
Also, the company’s downstream earnings could be impacted by narrower oil spreads in the third quarter. To learn more, read ExxonMobil Stock: Berenberg Cut Target Price before Q3.
Analysts expect Royal Dutch Shell (RDS.A) and Suncor Energy’s (SU) EPS to fall 15% and 25% YoY in the third quarter. They expect BP (BP), Total (TOT), and YPF’s (YPF) EPS to fall 38%, 39%, and 36% YoY, respectively, in the third quarter.
Second-quarter beat or miss
ExxonMobil and Chevron posted weak performance in their second-quarter results. In the quarter, ExxonMobil and Chevron’s earnings fell YoY by 21% and 1%, respectively.
In the previous quarter, ExxonMobil’s revenues at $69.1 billion beat analysts’ estimates. However, Chevron’s revenues at $38.9 billion missed the forecast.
While Chevron’s adjusted EPS at $1.77 missed analysts’ estimate, ExxonMobil’s adjusted EPS at $0.73 beat the forecast.
Which stock do analysts favor?
Before the third-quarter earnings, more analysts have a favorable opinion on Chevron. Among the analysts that cover these stocks, 72% rate Chevron as a “buy,” while 20% rate ExxonMobil as a “buy.”
Chevron had a better debt and liquidity position in the second quarter. Chevron had less debt in its capital structure. In the second quarter, Chevron had an operating cash flow surplus, while ExxonMobil had a shortfall. Read ExxonMobil or Chevron: Which Is the Better Buy? to learn more.
Analysts expect Chevron to outperform ExxonMobil ‘s earnings growth YoY in the third quarter. While analysts expect Chevron’s EPS to fall 21% YoY, they expect ExxonMobil’s EPS to fall 50% YoY. Analysts also favor Chevron due to its better earnings, lower debt, and stronger liquidity.