ExxonMobil's (XOM) Downstream Margins To Boost Q2 Earnings

Exxon Mobil Corporation (NYSE:XOM) recently provided an update on second-quarter 2019 earnings, which are expected to get a boost from refining margins. The company is expected to release second-quarter results on Jul 26, 2019.

Upstream

The largest publicly traded energy company expects crude price improvement to boost second-quarter profit by $400-$600 million sequentially. First-quarter 2019 earnings from the Upstream business came in at almost $3 billion. However, tumble of natural gas prices to multi-year lows — attributed to middling demand — can offset the positives from liquid price improvement. Notably, in the June quarter of 2018, it recorded total profit of $3,040 million, which was primarily supported by higher commodity prices.

Downstream

The Downstream segment, which incurred a loss of $256 million in first-quarter 2019, is expected to witness a $300-$400 million improvement in margins in the second quarter. The company recorded $724 million in profits from the segment in the year-ago quarter.

Chemicals

ExxonMobil expects weaker margins in the Chemicals segment to affect second-quarter profit levels in the range of $100-$300 million. Markedly, first-quarter profit came in at $518 million. Scheduled maintenance activities for the chemical business will likely have a negative impact on second-quarter earnings. In the year-ago period, the company recorded earnings of $890 million.

Earnings Estimates

The company is expected to report second-quarter earnings of 97 cents, which indicates a year-over-year increase of 5.4%. Notably, ExxonMobil beat estimates twice in the trailing four quarters, with a positive earnings surprise of 2.5%.

Price Performance

ExxonMobil has gained 12.3% year to date compared with 8.3% growth of the industry it belongs to.

Zacks Rank & Stocks to Consider

Currently, ExxonMobil carries a Zacks Rank #3 (Hold). Some better-ranked players in the energy space include Plains Group Holdings, L.P. (NYSE:PAGP) , Kinder Morgan, Inc. (NYSE:KMI) and Enterprise Products Partners L.P. (NYSE:EPD) . While Plains Group sports a Zacks Rank #1 (Strong Buy), Kinder Morgan and Enterprise Products have a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Plains Group’s sales growth is projected at 26.1% through second-quarter 2019.

Kinder Morgan’s 2019 earnings per share are expected to grow 11.2% year over year.

Enterprise Products’ 2019 earnings per share are expected to grow 10% year over year.

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