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Headlines
- Exxon Mobil's mixed Q2 results may lead to sideways trading.
- The company's stock has surged 18% year-to-date, significantly outperforming its peers.
- Historical performance shows volatility, raising questions about future trends.
Exxon Mobil (NYSE:XOM), a prominent name in the exploration, production, transportation, and sale of crude oil and natural gas, is set to reveal its fiscal second-quarter results on Friday, August 2. Despite mixed expectations, with revenue anticipated to miss while earnings marginally exceed market forecasts, the stock is likely to trade without significant movement. Year-to-date, XOM's stock has climbed 18% to $119, a stark contrast to Chevron Corporation's (NYSE:CVX) 7% growth to $161 in the same timeframe.
In the first quarter, Exxon Mobil's earnings fell short of market expectations, with a drop in net income and revenue compared to the previous year. The company pointed to inventory and non-cash tax adjustments as reasons for the disappointing earnings but emphasized its ongoing cost-saving measures and a stronger balance sheet.
Over the past three years, XOM stock has seen impressive gains of 200% from $40 in early January 2021 to around $119 now, compared to a 45% rise in the S&P 500 during the same period. However, this growth has been uneven: 48% in 2021, 80% in 2022, and a decline of 9% in 2023. By comparison, the S&P 500 recorded returns of 27% in 2021, a 19% drop in 2022, and a 24% increase in 2023, showing XOM's underperformance in the most recent year.
Beating the S&P 500 consistently has been challenging for individual stocks, including major players in the energy stocks sector like CVX, COP, and BP, as well as tech giants such as GOOG, TSLA, and MSFT. In contrast, the Trefis High Quality (HQ) Portfolio, comprising 30 stocks, has outperformed the S&P 500 annually over the same period. The HQ Portfolio's stocks have provided better returns with less risk, avoiding the volatility seen in the broader market.
Given the current uncertain macroeconomic environment, characterized by high oil prices and elevated interest rates, Exxon Mobil may face similar challenges as it did in 2023. The question remains: will XOM underperform the S&P 500 again, or will it experience a strong rebound?
