On Monday, Mizuho kept its Neutral stance on ExxonMobil (NYSE:XOM) with a consistent $128.00 price target. The firm has revised its second-quarter 2024 adjusted earnings per share (EPS) estimate for the oil giant downward by approximately 31% to $2.01 per share. The previous estimate was $2.92 per share, which did not reflect current market conditions, including natural gas prices and refining margins that were significantly higher than actual figures for the quarter.
ExxonMobil's early financial disclosure today indicated that while oil pricing was largely as expected, several factors led to the lower EPS forecast. These include weaker-than-anticipated refining margins, which were $400 million less than Mizuho's earlier predictions, and increased depreciation, depletion, and amortization (DD&A) expenses due to adjustments in the purchase price from the acquisition of Pioneer Natural Resources (NYSE:PXD), which added an additional $250 million in costs.
The acquisition-related expenses did not end there, as one-time costs associated with the deal were reported to be $150 million. These adjustments have brought Mizuho's final EPS estimate for ExxonMobil's second quarter of 2024 to $2.01 per share. This figure falls within the $1.56 to $2.38 per share range indicated by ExxonMobil's press release, yet it remains roughly 16% below the consensus estimate of other analysts.
Mizuho's reiterated $128 price target and Neutral rating reflect the firm's assessment of ExxonMobil's financial outlook in light of the recent quarter's performance and market conditions. The report underscores the impact of gas price dynamics, refining margin fluctuations, and costs related to ExxonMobil's recent acquisition on the company's short-term financial performance.
In other recent news, Exxon Mobil (NYSE:XOM) anticipates a boost in its second-quarter upstream earnings, expecting changes in oil prices to potentially increase earnings by $300 million to $700 million compared to the first quarter. This follows their first-quarter results which concluded with $5.7 billion in upstream earnings. In a related development, Exxon Mobil disclosed its second-quarter earnings considerations through a filing with the Securities and Exchange Commission.
In other news, Exxon Mobil is involved in a dispute with Chevron (NYSE:CVX) over the latter's $53 billion acquisition of Hess Corp (NYSE:HES). An arbitration panel is set to resolve the disagreement, which centers around whether Exxon holds a right of first refusal over Hess's assets in Guyana.
Further, the U.S. Senate Budget Committee has initiated an investigation into Exxon Mobil, among other major oil companies, for potential collusion with OPEC. The probe aims to determine if there has been any illegal coordination affecting oil output and crude oil prices.
In other updates, Exxon Mobil is nearing a supply deal with electric vehicle battery developer SK On for up to 100,000 metric tons of domestically sourced lithium. Lastly, a Goldman Sachs client note revealed that hedge funds are accelerating their purchases of commodity-sensitive stocks, including Exxon Mobil. These are some of the recent developments involving Exxon Mobil.
InvestingPro Insights
In light of Mizuho's neutral stance and updated earnings forecast for ExxonMobil, it's worth noting that the company has a strong track record of financial stability and shareholder returns. According to InvestingPro, ExxonMobil has raised its dividend for an impressive 41 consecutive years, underscoring its commitment to returning value to its shareholders. Additionally, the stock is known for its low price volatility, making it a potentially attractive option for investors seeking stability in the often turbulent energy sector.
ExxonMobil's market capitalization stands at a robust $441.86 billion, with a price-to-earnings (P/E) ratio of 13.71, which adjusts to 12.7 for the last twelve months as of Q1 2024. This indicates a relatively favorable valuation compared to industry peers. Moreover, the company's dividend yield as of May 14, 2024, is an appealing 3.35%, coupled with a dividend growth of 4.4% over the last twelve months. These metrics reflect ExxonMobil's strong financial health and its ability to generate shareholder value consistently.
For readers interested in further analysis and additional InvestingPro Tips, there are more insights available on the platform, including the company's status as a prominent player in the Oil, Gas & Consumable Fuels industry and its solid cash flows, which can sufficiently cover interest payments. To access these valuable resources and more, consider using the coupon code PRONEWS24 to get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription. With 6 additional InvestingPro Tips available, investors can gain a deeper understanding of ExxonMobil's financial landscape and make more informed investment decisions.
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