Earnings on Tap: ExxonMobil
The days of delivering returns at par with historical levels might be over for ExxonMobil, but it remains positioned to retain its top spot.
Market Update
ExxonMobil (XOM), the largest oil and gas firm in the United States, will report its second-quarter results before the market opens Thursday.
Wall Street analysts expect the company to post earnings of $1.89 per share compared with $3.41 in the corresponding quarter last year. This would be Exxon's lowest earnings since December 2010.
Revenue has declined in the last two quarters; it fell 15% in the first quarter compared with the year-ago period and dropped 2% before that. The company's oil and gas production has slowed in the recent period because of low natural gas prices in the U.S. and fewer oil fields coming into production.
However, Exxon is positioned to compete in a world with diminishing resources, Morningstar analyst Allen Good wrote in a recent Stock Analyst Report. Asia and Africa continue to be the company's largest-producing regions and are expected to continue as such, with numerous projects scheduled to come on line during the next five years in Nigeria, Angola, and Kazakhstan. Exxon also has the potential for shale resources in Europe and South America that would allow it to leverage its acquired unconventional technology and bolster its value proposition and competitive advantages in the global competition for resources, wrote Good.
The stock is up more than 8% year to date and currently trades around Morningstar's fair value estimate.