Q1 Earnings: Is Exxon Mobil set to strike oil or sink?

With Exxon Mobil Corp (NYSE: XOM) gearing up to unveil its first-quarter earnings report, investors are eyeing the horizon with anticipation. As the energy behemoth steps into the earnings spotlight, projections and expectations loom large.

Analysts have already made their predictions, estimating that Exxon Mobil will bring in around $81 billion in revenue for the January to March period. However, this estimate suggests a drop of more than 5% compared to the same time last year.

Oil prices play a huge role in Exxon Mobil’s earnings, and they’ve been on a rollercoaster ride lately. Starting in 2023 at over $72 per barrel, they dipped a bit at the beginning of 2024, hanging around $70. While this year has seen some improvements in oil prices, the first quarter didn’t see any extraordinary highs.

Looking back, 2023 had a stronger start, but things dipped in the second quarter. On the flip side, this year’s second quarter has seen a rise in crude oil prices.

Past performance can often give us clues about what to expect. Over the last 12 quarters, Exxon Mobil has exceeded revenue estimates on eight occasions. But for Q1, the consensus earnings per share estimate is $2.17, marking a significant 23% decrease from last year’s numbers.

Now that we’ve got a grasp of Exxon Mobil’s financial picture and the broader outlook on oil, it’s time to dive into the charts. Let’s take a closer look at the technical indicators and patterns to figure out where Exxon Mobil might be headed before and after its Q1 earnings report.

Being one of the largest oil companies in the world, it is not difficult to conclude that Exxon’s stock is closely correlated to the movement in oil prices. As oil prices suffered a rout between mid-2014 and 2020, Exxon’s stock also collapsed from above $100 to $30 levels.

XOM chart by TradingView

The wild up-move in oil prices starting just after the onset of the COVID pandemic also provided fuel to Exxon’s stock to march higher as it rallied non-stop between November 2020 and September 2023, providing a four-fold return to investors during the process.

This rally seemed like it had come to an end during Q4 of 2024, when the stock broke below its long-term trendline starting in November 2023. However, with a gain of around 20% in the last two months alone and surpassing the previous high of $120.70 by making a new all-time high of $123.75 recently, the stock seems to have started another uptrend, which is great news for long-term investors.

In the daily charts of Exxon, we can see that the stock was rangebound between $100-$120 for most of last year and even earlier this year. However, it had a breakout above this trade earlier this month, which is an extremely encouraging signal going into earnings.

XOM chart by TradingView

Based on what the charts are suggesting, taking a long position in Exxon before Q1 earnings is advisable for traders. One can go long here near $121, keeping a stop loss a few cents below $112. But, a better trade would be purchasing Exxon’s $120 strike call option expiring on May 17 at $3.40

Traders who want to short the stock must wait until the company earnings release and if the stock falls below $112 they can go short at that level, keeping the recent high as a stop loss. Falling below $112, the stock will next find support near $98.6, which can be kept as the first profit target.

The post Q1 Earnings: Is Exxon Mobil set to strike oil or sink? appeared first on Invezz