Why ExxonMobil Stock Rose as Much as 6.5% in Morning Trading

What happened

Shares of a major integrated oil company ExxonMobil (NYSE: XOM) It was up about 6.5% at one point in morning trading on Tuesday. The company’s earnings announcement, which was released before the opening of trading, was the driving force here. But the actual results were probably less important than other things the administration said.

so what

Oil and natural gas prices have been fairly strong for a while, and investors mainly went to Exxon’s Q4 2021 earnings expecting to hear good numbers.

They weren’t disappointed, as the company reported revenue of nearly $85 billion, up from $46.5 billion in the same quarter of 2020. Adjusted earnings were $2.05 per share, up from adjusted earnings of $0.03. Both numbers beat analyst expectations, which were for revenue of $82.4 billion and earnings of $1.96 per share. Investors like when the company beat expectations, so this was generally good news, but the good quarter wasn’t a shocking development given recent commodity strength in oil and natural gas.

A person standing in front of an oil platform with a disk in his hand.

Image source: Getty Images.

Most notable was the company’s guidance. First, the day before the earnings were announced, Exxon announced plans to streamline its business structure and give more importance to clean energy. Today it provided more clarity about some of its plans, including its intention to continue working to reduce costs and keep annual capital spending in the $21 billion to $24 billion range, lower than previous forecasts for the pandemic.

However, this spending plan includes the intention to increase onshore energy production in the Permian Basin by up to 25%. The company has also started a $10 billion share buyback plan which is expected to be completed within the next 12 to 24 months.

The key here is that higher energy prices and lower spending are likely to support physical cash flows that can be put to other uses. These include ongoing debt reductions, stock buybacks, and dividend payments for the company, which seem increasingly safe. Investors have been running all of these things on their minds for some time, and Wall Street appears to be pleased with the way the energy giant is choosing to approach these initiatives now that energy prices have recovered.

What now

Exxon, like many of its peers, has seen a significant rebound in stock prices from early lows. However, the yield is still a fairly generous 4.6%. As one of the world’s largest integrated energy companies, this is an interesting stock for those looking to play the oil and natural gas game.

However, it has not moved into the clean energy field as quickly as some of its European counterparts. However, if you want to focus more on oil, this approach may be exactly what you are looking for, as today’s earnings show how well the company does when commodity prices are high.

10 stocks we like better than ExxonMobil
When our award-winning analyst team has stock advice, they can pay to listen. After all, the newsletter they’ve been running for over a decade, Motley Fool Stock AdvisorThe market tripled. *

They just revealed what they think are the ten best stocks investors can buy right now… and ExxonMobil wasn’t one of them! That’s right – they think these 10 stocks are the best buys.

See the ten stocks

*Stock Advisor returns from January 10, 2022

Reuben Gregg Brewer has no position in any of the stocks mentioned. The Motley Fool does not have a position in any of the stocks mentioned. Motley Fool has a disclosure policy.

The opinions and opinions expressed here are those of the author and do not necessarily reflect the views and opinions of Nasdaq, Inc.

Leave a Comment