The energy sector has been the top performer this year buoyed by higher oil prices. U.S. oil and Brent futures climbed to their highest since October 2014 amid the global supply crunch and strong demand in the United States, the world's biggest consumer (read: 5 Best ETFs & Stocks of the Top Performing Energy Sector).
As such, the ultra-popular ETFs Energy Select Sector SPDR XLE, Vanguard Energy ETF VDE, iShares U.S. Energy ETF IYE and Fidelity MSCI Energy Index ETF FENY have risen at least 15.5% each over the past three months. The uptrend is likely to continue given that the sector is on track to earn $23.9 billion in the third quarter. In comparison, the sector’s year-ago profitability was barely in positive territory.
Let’s delve into the earnings picture of three oil biggies, Exxon Mobil XOM, Chevron CVX and ConocoPhillips (NYSE:COP) COP, which dominate the abovementioned funds’ portfolio and have the power to move the funds up or down in the coming days. Both Exxon and Chevron are slated to release their earnings before the market opens on Oct 29, while ConocoPhillips will report on Nov 2. These firms collectively make up for 46.8% of XLE, 44.3% of IYE, 43.1% of FENY and 43.2% of VDE (see: all the Energy ETFs here).
With oil and gas prices at multi-year highs, U.S. oil producers are poised to deliver the strongest earnings since the onset of the coronavirus pandemic, so long as they did not lock in sales tied to much lower prices.
According to our methodology, the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
What’s in the Cards?
Exxon Mobil has a Zacks Rank #1 and an Earnings ESP of 0.00%. The company witnessed positive earnings estimate revision of couple of cents over the past seven days for the to-be-reported quarter. The stock delivered an average earnings surprise of 63.43% for the last four quarters. The Zacks Consensus Estimate indicates an earnings growth of 972.2% from the year-ago quarter reported figure. Exxon Mobil has a VGM Score of B.
Chevron has a Zacks Rank #1 and an Earnings ESP of 0.00%. It has witnessed an upward earnings estimate revision of 9 cents over the past 30 days. The company delivered an average earnings surprise of 8.58% in the last four quarters. The Zacks Consensus Estimate for the company’s earnings indicates a massive increase of 1909.1% from the year-ago quarter reported figure. The stock has a Momentum Score of B.
ConocoPhillips has a Zacks Rank #1 and an Earnings ESP of +1.85%. The company witnessed positive earnings estimate revision of 3 cents over the past seven days for the to-be-reported quarter. The stock delivered an average earnings surprise of 8.29% for the last four quarters. The Zacks Consensus Estimate indicates an earnings growth of 587.1% from the year-ago quarter reported figure (read: Why Oil & Gas ETFs are Surging Again).
Conclusion
The three firms saw positive earnings estimate revisions before the earnings announcements. Analysts raising estimates right before earnings — with the most up-to-date information possible — is a good indicator for the stock. VDE has a Zacks ETF Rank #2 while the remaining three ETFs have a Zacks Rank #3.
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Chevron Corporation (NYSE:CVX): Free Stock Analysis Report
Exxon Mobil Corporation (NYSE:XOM): Free Stock Analysis Report
ConocoPhillips (COP): Free Stock Analysis Report
Energy Select Sector SPDR ETF (NYSE:XLE): ETF Research Reports
iShares U.S. Energy ETF (IYE): ETF Research Reports
Vanguard Energy ETF (VDE): ETF Research Reports
Fidelity MSCI Energy Index ETF (FENY): ETF Research Reports
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