ExxonMobil Expects Its Profits to Fall. Time to Buy the Oil Stock on the Dip?

Core Viewpoint - ExxonMobil is facing challenges in the fourth quarter with a profit warning, but it remains a strong investment opportunity due to its long-term growth plans and industry-leading profitability [2][7]. Financial Performance - In the third quarter, ExxonMobil reported $8.6 billion in profits and $17.6 billion in cash flow from operations, leading the oil industry [1]. - For the fourth quarter, ExxonMobil expects earnings of $1.76 per share, significantly below analysts' expectations and lower than both the previous year's $2.48 and the third quarter's $1.92 [3]. Challenges Faced - The company encountered several headwinds, particularly in refining, where lower margins reduced earnings by $300 million to $700 million, and timing issues cut an additional $500 million to $900 million [4]. - Impairments are expected to result in charges of approximately $600 million, and lower margins in the chemicals business are anticipated to reduce earnings by around $400 million [5]. Upstream Performance - Despite the challenges, earnings from the upstream oil and gas production segment are expected to increase by about $400 million, aided by a 30% rebound in natural gas prices in the U.S. [6]. Future Growth Strategy - ExxonMobil has outlined a 2030 plan aiming for an additional $20 billion in earnings and $30 billion in free cash flow, supported by various strategic initiatives [7]. - The company anticipates generating $165 billion in surplus cash by 2030, allowing for continued dividend increases and stock buybacks, with plans to repurchase $20 billion of shares in 2025 and 2026 [8]. Investment Opportunities - The combination of earnings growth, cash-flow generation, and increased capital returns positions ExxonMobil to create significant value for investors in the coming years [9]. - The stock price is currently about 15% below its 52-week high, presenting a potential buying opportunity for long-term investors [12].