The price of oil (CL1:COM) has slumped recently but remains more than 9% higher for the year. Meanwhile, three major players in the industry released earnings late last month: ExxonMobil (NYSE:XOM), Chevron (NYSE:CVX) and Phillips 66 (NYSE:PSX).
With energy still one of the top performing sectors in 2024, Seeking Alpha analysts weigh in on the outlook for XOM, CVX and PSX.
ExxonMobil
ExxonMobil, the largest U.S. oil producer, announced Q1 Non-GAAP EPS of $2.06, missing expectations by $0.12. However, the firm beat revenue projections.
Power Hedge in Exxon Mobil: Positioned For Strong Growth And Current Buying Opportunity: “Despite the disappointing results, there were positive highlights, including good results from the Payara project in Guyana… Exxon Mobil is positioned to potentially at least double its upstream profits by 2027, although rising energy prices will probably boost that further.” Vladimir Dimitrov in Exxon Mobil: Excellent Business, With Near-Term Challenges For The Share Price: “Exxon Mobil Corporation stock remains as one of my favorite long-term plays in the energy sector. But after delivering a total return of more than 300% since 2020, it is difficult to remain optimistic about the share price, at least in the short term.”
Chevron
The California-headquartered Chevron (CVX) delivered Q1 Non-GAAP EPS of $2.93, topping estimates by $0.03. The firm also missed revenue expectations, reporting a top-line figure of $48.72B (-4.1% Y/Y).
Long Player in Chevron: The Fast Way To Hot Spots: “Chevron is considering an acquisition offer for Hess, which could benefit shareholders in the long run…The profitability of Hess is heavily reliant on the Guyana production boost, making it a valuable asset for CVX.” The Value Portfolio in A Volatile Chevron Is Expensive Again: Despite a strong dividend yield, “it’s not a yield that the company can sustain without drawing down its cash pile. … The company’s ability to drive shareholder returns to justify its valuation is tough. Overall, though, the company is an overvalued investment, making it a poor investment.”
Phillips 66
Phillips 66 recently reported Q1 Non-GAAP EPS of $1.90, which missed analyst estimates by $0.30.
Michael Fitzsimmons in Phillips 66: Turnaround Still Very Much A Work In Progress: “Phillips 66’s Q1 earnings report was another in a long line of disappointing results, showing that the company’s refining ‘turnaround’ is still very much a work in progress.” Seeking Profits in Phillips 66: Despite A Dividend Hike, Upside May Be Limited: “One can argue that because its business is more diversified, PSX can justify a premium valuation; however, in a cyclical upturn, PSX’s cash flow growth may struggle to keep up with peers, and with it potentially using some cash to deleverage its balance sheet, shareholders may not see the full benefit.”
For investors looking to gain additional exposure in the oil and energy market, here is a handful of prominent exchange traded funds related to the sector:
Oil Funds
United States Oil Fund LP (USO) United States 12 Month Oil Fund LP (USL) Invesco DB Oil Fund (DBO) ProShares Ultra Bloomberg Crude Oil (UCO) ProShares UltraShort Bloomberg Crude Oil (SCO)
Energy Funds
Energy Select Sector SPDR Fund (XLE) Energy Select Sector SPDR Fund (VDE) SPDR S&P Oil & Gas Exploration & Production ETF (XOP) VanEck Oil Services ETF (OIH) iShares Global Energy ETF (IXC)