ExxonMobil rose nearly 3% Monday to break a five-day losing streak. Can XOM stock reclaim the throne of the energy industry?
The stock is in a cup-with-handle base and bumped up to its 50-day moving average after sinking below it in sympathy with lower crude oil prices in early September. The stock climbed Monday as oil prices rose on threats that tropical storm Francine is headed toward the southern U.S. crude oil prices climbed around 1.5% Monday.
Exxon Fights For Oil Fields In Guyana
The company continues its fight for an oil-rich field in Guyana owned by Hess. Hess shareholders approved the acquisition of the company by Chevron on May 28.
The $53 billion stock deal includes the 30% stake that Hess owns in the prime Guyana oil fields. Exxon and China National Offshore Oil Corporation, or CNOOC Group, claim they have a right to provide a counteroffer to Hess for the Guyana offshore oil operation project.
The potential counteroffer prompted Chevron to alert investors that it may not go through with the acquisition of Hess "within the time frame the company anticipates or at all."
Crude Oil Prices Influence XOM Stock
Energy companies made up less than 4% of the S&P 500 as of July 2024. And Chevron continues to battle ExxonMobil for leadership of the energy industry, as do foreign oil giants such as Shell and BP.
Crude oil prices are coming off a 15-month low reached on Friday. The average price of gasoline across the U.S. on Monday was $3.27 per gallon vs. $3.82 one year ago, according to AAA data. West Texas Intermediate (WTI) oil prices dipped 1.5% to $68.71 a barrel on Monday.
Natural gas prices soared after the Russia-Ukraine war erupted then plunged to a low in April. Prices rallied to a high in early June before reversing sharply.
Earnings Turnaround Looks To Be Over
Exxon reported higher-than-expected adjusted second-quarter earnings and higher sales than views on Aug. 2.
Adjusted EPS rose 10% from the prior year to $2.14 per share, after four straight quarters of declining earnings growth. Meanwhile sales increased 12% to $93.1 billion following five consecutive quarters of falling sales.
The oil giant had been one of one of America's most profitable companies but Exxon lost its edge when its earnings and sales started dropping. It reported a total of six straight quarters of slowing or declining profits before the current turnaround.
FactSet estimates, however, show the improvement will be short-lived: Analysts expect third-quarter profit to drop 7% and 15% in Q4.
Sales are projected to increase 6% in the third quarter followed by 10% and 7% growth in the following two periods. Analysts lowered their 2024 EPS expectations to $8.50, or an 11% drop, with a rise to $9.11 in 2025, according to MarketSurge.
XOM stock's Composite Rating weakened to a suboptimal 64 while its EPS Rating is 83 out of 99.
The stock holds an Accumulation/Distribution Rating of D-, indicating fairly heavy institutional selling over the last 13 weeks. The stock's annualized dividend yield is around 3.3%.
XOM Stock Technical Analysis
ExxonMobil stock is in an early stage cup-with-handle base with a 120.50 buy point. The stock broke out of a saucer base with a 120.70 buy point on April 5, but the stock reversed lower within days of the breakout. That started the current base.
XOM stock tested the 120 level in August, a level where it has faced resistance going back to November 2022. Its weekly MarketSurge chart now shows several breakouts that have stalled or failed near that level.
Its relative strength line has been on a jagged downtrend since November — a drawback for the current base.
ExxonMobil Follows Oil Prices
As with other oil stocks, Exxon will rise and fall with crude oil prices. So even when Exxon looks good based on fundamentals, crude oil prices may suddenly plunge, taking XOM stock down, too. On the other hand, a rise in oil prices may help lift the stock.
Investors could choose to buy an energy exchange traded fund as a way to play sector moves while avoiding stock-specific risk. Energy Select Sector SPDR Fund and the iShares U.S. Energy ETF are two energy-related ETFs. But those ETFs are still exposed to crude oil price swings.
Exxon and Chevron are major weights in XLE.
Is XOM Stock A Buy?
The bottom line: XOM stock is in a base but it is not currently a buy or a sell. If the stock climbs back above its 50-day line, it would be a positive sign. Still, investors could put it on a watchlist and wait for the stock to break out.
Investors can check out IBD Stock Lists and other IBD content to find dozens of the best stocks while waiting for Exxon's bottom line to improve and for the stock to reach a buy point.
Follow Kimberley Koenig for more stock market news on X, the platform formerly known as Twitter, @IBD_KKoenig.
