Exxon Mobil Corporation (NYSE:XOM) | Chevron Corporation (NYSE:CVX)
If you’re an investor, you know that the oil market has fallen on some serious hard times; and with things going the way they’ve been, things will only get worse. Unfortunately, the downward trend in the value of oil has started to wreak serious havoc for the oil giants, ExxonMobil and Chevron. Both of these companies released their earnings reports Friday; showing shocking declines, even in the midst of the oil crisis. Today, we’ll take a look at the earnings reports from XOM and CVX, how the market reacted to earnings, and what we can expect to see moving forward. So, let’s get right to it…
XOM Beats Revenue, But Misses Earnings
Exxon Mobil produced a bit of a mixed report. While the company did beat top-line revenue expectations, they fell flat when it came to earnings. Here’s what we saw…
- Top-Line Revenue – Wall Street expected XOM to produce $72.5 billion in top line revenue for the second quarter. However, the company beat these expectations in a big way; producing $74.1 billion instead.
- Earnings – Nonetheless, when it comes to earnings, the company missed expectations; producing only $1.00 per share. Analysts expected to see the company generate $1.11 per share.
Following the earnings release, XOM CEO, Rex W. Tillerson had the following to say…
“We are delivering on our investment and operating commitments across Exxon Mobil’s integrated portfolio… Our quarterly results reflect the disparate impacts of the current commodity price environment, but also demonstrate the strength of our sound operations, superior project execution capabilities, as well as continued discipline in capital and expense management.”
CVX Follows The Same Path
Unfortunately for Chevron, their report really wasn’t much different; aside from the fact that their earnings miss was far wider. Here’s what we saw…
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Top-Line Revenue – In terms of top-line revenue, CVX did incredibly well; producing $40.357 billion in the quarter. Analysts only expected that the company would produce $29.533 billion.
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Earnings – Unfortunately however, the strong revenue didn’t bleed into earnings. In the quarter, the company earned $0.75 per share; far short of the $1.13 per share analysts were expecting to see.
Here’s what a Chevron representative had to say after the release of earnings…
“In light of the current market environment, Chevron is taking action to reduce internal costs in multiple operating units and the corporate center. These initiatives, which are currently underway, are focused on increasing efficiency, reducing costs and focusing on work that directly supports business priorities.”
How Investors Reacted To The News
As we’ve come to expect any time a company misses earnings expectations, both Exxon Mobil and Chevron saw declines as a result of their reports. Here’s how trading ended for both companies on Friday…
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Exxon Mobil – Exxon Mobil lost 4.48% in the trading session; closing the day out at $79.29.
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Chevron – Chevron lost 4.92% in the session; closing the day at $88.45 per share.
What We Can Expect To See Moving Forward
To tell the truth, I don’t like to be the bearish speculator as I like to think of the positivity that could send stocks up. Unfortunately however, I don’t think I have much of a choice in this particular case. The reality is that both of these companies are feeling the pain of an incredibly poor commodities market; and if world news is any indication, this isn’t likely to change. The bottom line is that with the persistent strong dollar, poor economic conditions around the world, and massive oil supply glut, I simply don’t see any opportunities for strong growth at the moment. Nonetheless, there is a bit of a glimmer around the dark cloud. Poor oil prices are likely to drive XOM and CVX down even further, but aren’t likely to last forever. So, long term investors may want to look at these declines as a way to get in on the future oil market at a discounted price.
What Do You Think?
What do you think is ahead for XOM and CVX? Let us know in the comments below!