Last Look At ExxonMobil Earnings (XOM, VLO, SLB, XLE)

Integrated oil giant ExxonMobil (NYSE:XOM) is set to report earnings on Thursday morning, and it is still a wonder as to why shares are lagging behind the market when oil traded up over $4.00 per barrel today to a new $94.53.

A chartist would say this doesn’t bode well at all for earnings.  Energy has definitely seen a bit of a sector rotation out into tech, which was partly noted on the Goldman Sachs downgrade on oil as a commodity yesterday.  Without owning a crystal ball, we can’t say which is right or if both combined make the explanation right.

First Call has estimates pegged at $1.75 EPS tomorrow.  The company’s buyback continues, but with shares up around $90 it’s a wonder just how many shares the largest oil company in the world actually bought.  Options are a bit hard to use as a comparison to others, but it looks like options traders have an expected price change in a range of $2.50 to $3.40 in either direction.  Analysts that follow Exxon have an average price target of about $97.00.

What is hard to imagine is that Exxon’s numbers would be bad with oil prices this high.  But Valero (NYSE:VLO) posted lackluster earnings because of refinery costs.  Schlumberger (NYSE:SLB) has also performed dismally since its earnings report.

Shares closed up 0.9% today at $91.99, and the 52-week trading range is $69.02 to $95.27.  Regardless of the actual number on EPS tomorrow, you can imagine the media headlines are going to be focused on the monstrous revenue number for its shock effect.  It will be interesting to see the reaction in the Energy Select Sector SPDR (AMEX:XLE) since ExxonMobil makes up some 21.38% of the ETF on last look.

Jon C. Ogg
October 31, 2007

Jon Ogg can be reached at [email protected]; he produces the Special Situation Investing Newsletter and does not own securities in the companies he covers.