Exxon Mobil Corporation (NYSE:XOM) shareholders are probably feeling a little disappointed, since its shares fell 2.2% to US$32.62 in the week after its latest third-quarter results. Revenues of US$46b came in a modest 4.5% below forecasts. Statutory losses were a relative bright spot though, with a per-share loss of US$0.15 coming in a substantial 42% smaller than what the analysts had expected. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there’s been a strong change in the company’s prospects, or if it’s business as usual. We’ve gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.
Taking into account the latest results, the most recent consensus for Exxon Mobil from 16 analysts is for revenues of US$215.5b in 2021 which, if met, would be a decent 12% increase on its sales over the past 12 months. Statutory earnings per share are predicted to leap 41% to US$1.09. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$215.6b and earnings per share (EPS) of US$1.17 in 2021. The analysts seem to have become a little more negative on the business after the latest results, given the small dip in their earnings per share numbers for next year.
The consensus price target held steady at US$45.61, with the analysts seemingly voting that their lower forecast earnings are not expected to lead to a lower stock price in the foreseeable future. There’s another way to think about price targets though, and that’s to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. Currently, the most bullish analyst values Exxon Mobil at US$74.00 per share, while the most bearish prices it at US$33.00. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.
One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. The analysts are definitely expecting Exxon Mobil’s growth to accelerate, with the forecast 12% growth ranking favourably alongside historical growth of 2.0% per annum over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 12% next year. Factoring in the forecast acceleration in revenue, it’s pretty clear that Exxon Mobil is expected to grow at about the same rate as the wider industry.
The Bottom Line
The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. Happily, there were no real changes to sales forecasts, with the business still expected to grow in line with the overall industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.
Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year’s earnings. At Simply Wall St, we have a full range of analyst estimates for Exxon Mobil going out to 2023, and you can see them free on our platform here..
That said, it’s still necessary to consider the ever-present spectre of investment risk. We’ve identified 4 warning signs with Exxon Mobil (at least 1 which is concerning) , and understanding these should be part of your investment process.
This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.