ExxonMobil Earnings: Results Exceed Expectations as Repurchase Guidance Unchanged

Key Morningstar Metrics for ExxonMobil

• Fair Value Estimate: $135.00
• Morningstar Rating: ★★★★
• Morningstar Economic Moat Rating: Narrow
• Morningstar Uncertainty Rating: High

What We Thought of ExxonMobil’s Earnings

ExxonMobil’s XOM first-quarter earnings of $7.7 billion surpassed market expectations while falling from $8.2 billion a year ago on lower commodity prices and refining margins. It left full-year repurchase guidance of $20 billion in place. Net debt to capital ticked up slightly to 7%, even as total debt fell.

Why it matters: Exxon is in a stronger position than peers, given its profitability expansion opportunities through investment in high-quality assets and ongoing cost reductions. The quarter demonstrated this, with Exxon delivering earnings and cash flow relatively better than peers as new projects and cost reductions take hold.

• Production fell to 4,551 thousand barrels of oil equivalent per day from 4,602 in the fourth quarter, as divestments offset continued growth from high-margin volumes in Guyana and the Permian.
• Exxon realized another $0.6 billion in structural cost reductions, bringing its total to $12.7 billion since 2019, and the firm is on track to reach its $18 billion target by 2030.

The bottom line: Our $135 fair value estimate and narrow moat rating are unchanged. A selloff during the last month has left shares trading 20% below our fair value estimate.

• Exxon is best-positioned among integrated oil firms for a potential downturn, given its underlying earnings growth and strong balance sheet. It paid off debt during the quarter, unlike many peers who issued debt. This strength should keep shareholder returns intact if oil weakens further.