Exxon Mobil Earnings Preview: First Quarter 2009

Exxon Mobil [[XOM]] is expected to report their first quarter 2009 results before the market opens on Wednesday, April 30. Based on our analysis, we at EarningsPreviews.com are expecting XOM to report better than expected results that exceed Wall Street’s consensus expectations.

 

Analyst Expectations

We are forecasting EPS of $.99. This would represent a 51% decline in earnings from last year’s $2.03 EPS in the same period. The current analyst consensus estimates calls for earnings of $.94 per share.

 

Although the company is notoriously unhelpful in providing performance guidance, we expect that Exxon Mobil’s conservative business approach will allow it to deliver better than expected first quarter results. However, the headline story will likely be negative as earnings are expected to drop significantly from 2008 levels.

 

Last year, Exxon Mobil earned an amazing $44 billion. In 2009, earnings are likely to be less than half that amount due to falling oil prices. However, Exxon Mobil sees the low oil prices as a good opportunity to repurchase their shares at their current levels. They expect to repurchase $7 billion in shares in the first quarter alone, but we expect that repurchase rate may drop in the second half of the year.

 

Share Performance

Since the beginning of the year, Exxon Mobil’s shares are down 19%. However, in 2008 XOM’s shares fell less than 15% as they outperformed the 34% decline in the Dow Jones index.

 

Valuation

Shares are now trading at 11x consensus 2010 EPS estimates. This is a premium to the relative valuations of their peer group. With oil prices currently trading below $50, we expect that Exxon Mobil’s shares could trade higher in the coming months as oil prices increase.

 

Recommendation: Buy with a $75 price target.

 

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