Bracing For Energy Giants' Earnings (COP, APA, XOM, FSLR, CVX)

We have already seen earnings from Valero Energy Corp. (NYSE: VLO) and BP Plc (NYSE: BP), and these figures are acting to keep a lid on oil stocks.  There is, of course, the notion of commodity price changes each day, but a key idea here is just how much the CFTC review is going to act against speculators in the near future in the energy and commodity markets.  ConocoPhillips (NYSE: COP), Apache Corporation (NYSE: APA), ExxonMobil Corporation (NYSE: XOM), First Solar, Inc. (NASDAQ: FSLR), and Chevron Corp. (NYSE: CVX) are all on deck this week for earning.  We have compiled basic expectations and technical data on what to watch for in these earnings.

On Wednesday morning, we will see earnings from the troubled integrated ConocoPhillips (NYSE: COP) with estimates pegged at $0.85 EPS.  This was one of our “energy stocks to double” by the end of the recession.  Estimates are much thinner on revenues, but those are $39.08 billion.  Estimates one quarter out are $0.98 EPS.  Conoco gets ridiculed all the time for its problems and its lackluster performance, but its stock rally since early July has taken it above both the 50-day moving average and the 200-day moving average.  Those two moving averages are also about a week and half away from converging, so this will be one to watch for a potential directional change even a week out.  If you look at the chart review, the 200-day moving average today is $44.58, and today’s pullback has taken shares down to $44.45.  The 50-day moving average is also $43.40.  FULL CHART

Thursday morning we will get earnings from Apache Corporation (NYSE: APA).  The oil and nat-gas exploration and production company is expected to post $1.07 EPS on $1.86 billion in revenues.  With shares close to $80.00 before today’s pullback, we would pay close attention to its chart before it reports.  The 50-day moving average is currently $76.88 and right under the current price of the stock at $77.10.  This is also in between its 52-week range of $51.03 to $124.79.  As you will see in the chart, the 50-day moving average has been support for the last week and that reading is currently $76.88.  FULL CHART

Also on Thursday morning we will get the “Big Blue” of the energy sector…. ExxonMobil Corporation (NYSE: XOM).  Today and tomorrow are going to be crucial for where this stock goes on a technical basis.  Earnings estimates are $1.02 EPS and the handful of revenue estimates are looking for almost $71.3 billion in top-line revenues.  To show just how different this is from the peak-oil revenues, that compares to $137.737 billion for the September-2008 end quarter and $138.072 billion for the June-2008 end quarter.  The chart here says it all.  At $71.28, its 200-day moving average is $71.52 and the 50-day moving average is $70.10.  This post-earnings reaction could create a severe directional change in either direction if those averages converge over the next week or two.  FULL CHART

Thursday afternoon we will get earnings from the US-based solar giant First Solar, Inc. (NASDAQ: FSLR).  Many might not think of it as an energy producer due to its stance in solar.  But as an alternative energy leader, this is now well over a $1 billion per year business in sales.  Estimates for this quarter are $1.62 EPS and just over $459 million in revenues.  Estimates for next quarter are $1.68 EPS and $510 million in revenues.  For this year, those estimates are $7.07 EPS and $1.91 billion in revenues.  We doubt highly that any estimates are going to be given for 2010, but those estimates are $8.39 EPS and $2.54 billion in revenues.  With shares around the $165 mark, this might not make most trader blush with a forward P/E ratio of 23 for this year.  But its $14 billion market cap puts it trading with a value of almost 7.4-times revenues.  Its chart says it all, as you will see.  This found serious support around its 200-day moving average in early July before the latest rally took it up 20%.  An its stock has petered out around the 50-day moving average this week.  At $165-ish, that 50-day moving average is currently $168.45.  We still have two days before the report, but options appear to be bracing for anything up to a move of $13.00 to $15.00 if today’s pricing is representative of the price and earnings action.

Friday morning will be the other integrated oil giant Chevron Corp. (NYSE: CVX).  Analysts are expecting $0.95 EPS and there are just a few revenue targets at $33.4 billion.  We could go on and on, but frankly the numbers and even the levels here may be grossly different on Friday after we have seen reports from Conoco, Exxon, and others.  If you take a quick glance at the chart, you will see that this one is also at a critical juncture with its 50-day and 200-day moving averages.

Again, it is very likely that some of these estimates and figures will be different by the time each of these have reported earnings.  All estimates were Thomson Reuters estimates and the charts and moving average data is from StockCharts.com.

Jon C. Ogg
July 28, 2009