ExxonMobil After Q1 Earnings: Should You Still Own the Stock?

Core Viewpoint - Exxon Mobil Corporation (XOM) reported first-quarter 2025 earnings that exceeded expectations, driven by higher production from Guyana and the Permian Basin, along with structural cost savings, indicating a strong business outlook [1] Group 1: Q1 Earnings Results - XOM reported earnings per share of $1.76, surpassing the Zacks Consensus Estimate of$1.74, but down from $2.06 a year ago [2] - Total quarterly revenues were$83.13 billion, missing the Zacks Consensus Estimate of $84.15 billion, but slightly up from$83.08 billion year-over-year [2] Group 2: Acquisition and Synergy Estimates - XOM completed the acquisition of Pioneer Natural Resources on May 3, 2024, enhancing its presence in the Permian with 1.4 million net acres and an estimated 16 billion barrels of oil equivalent resource [4] - The average annual synergy from the Pioneer acquisition has been revised upward from approximately $2 billion to over$3 billion [5] Group 3: Future Projects and Cash Flow - XOM is launching 10 advantageous projects this year expected to generate over $3 billion in earnings next year, focusing on premium products and market entry while adhering to budgets [6] - A notable project includes a large chemical plant in China, which was under budget and ahead of schedule, addressing local demand and tariff concerns [8] - These projects aim to increase cash flow by$30 billion by the end of the decade [8] Group 4: Industry Comparison - Chevron and BP, other major integrated energy companies, reported their Q1 results, with Chevron's adjusted earnings per share at $2.18 and BP's at 53 cents, both reflecting challenges in the current market [9][11] Group 5: Stock Performance and Valuation - Despite positive developments, XOM's stock has declined 11.6% over the past six months, underperforming the industry average decline of 10.7% [13] - XOM's stock is currently trading at a 6.52x trailing 12-month EV/EBITDA, which is a premium compared to the industry average of 3.92x, indicating potential overvaluation [18]