Exxon Mobil’s (XOM) preliminary outlook for the fourth quarter signals a sequential decline of about $1.75 billion in earnings. The weak forecast is primarily due to lower crude oil prices and an overall disappointing business performance.
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Nevertheless, ExxonMobil expects a boost from higher gas prices, which could increase earnings by up to $400 million. This comes as natural gas prices were up about 30% on a sequential basis during the fourth quarter.
XOM is scheduled to release its fourth-quarter earnings report on January 31, 2025.
Key Factors Impacting XOM’s Q4 Results
The guidance comes as oil prices in Q4 were down nearly 6% sequentially and 12% year-over-year, due to concerns over global oil demand. This likely hurt XOM’s bottom line to a great extent. Further, the company said weaker-than-expected global gasoline and diesel demand in Q4 and oversupply of oil in Asia and Africa resulted in lower refining margins, which hurt ExxonMobil’s earnings.
According to the SEC filing, the company anticipates a $500 million to $900 million decrease in Q4 upstream earnings compared to the third quarter. At the same time, changes in the timing of certain transactions are expected to reduce earnings in the Energy Products segment by another $500 million to $900 million.
Also, weaker margins in its chemicals business compared to the previous quarter hurt performance. In addition, XOM anticipates a negative impact of about $600 million on earnings due to impairment costs.
Is Exxon a Buy, Sell, or Hold?
Turning to Wall Street, XOM has a Moderate Buy consensus rating based on 12 Buys, seven Holds, and one Sell assigned in the last three months. At $131.20, the average ExxonMobil price target implies 20.64% upside potential. Shares of the company have gained 10.15% over the past three months.
