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ExxonMobil Q1 FY2022 Earnings Report Preview: What to Look For

Focus on XOM upstream segment net income

Key Takeaways

  • Analysts estimate EPS of $2.01 vs. $0.64 in Q1 FY 2021.
  • Upstream segment net income is expected to more than triple YOY.
  • Revenue is expected to rise for a fifth straight quarter amid surging oil prices.

ExxonMobil Corp. (XOM) reported its highest profit and revenue in recent years in fiscal year 2021 as they recovered from lows reached during the worst of the pandemic. The company's rebound is largely being driven by soaring oil prices, which got another boost this year after Russia invaded Ukraine. Russia is one of the world's largest oil-producing nations. ExxonMobil is seeking to bolster profits even more with plans to save an extra $3 billion in costs by the end of the year.

Investors will be watching to see if ExxonMobil is able to maintain the rapid pace of growth it has exhibited over the past year when it reports earnings on April 29, 2022 for Q1 FY 2022. Analysts expect strong growth in earnings per share (EPS) and revenue.

Investors also will focus on another key metric: net income for Exxon's upstream segment, which is involved in the exploration, development, and production of oil and natural gas. Analysts expect the segment's net income to rise at a rapid pace.

Shares of ExxonMobil have outperformed the broader market over the past year. The stock oscillated between outperformance and underperformance from about late April 2021 to around the end of December 2021. The stock then took off in late December and has outperformed ever since. Exxon's shares have provided a total return of 58.4% over the past year, well above the S&P 500's total return of -0.3%.

One Year Total Return for S&P 500 and ExxonMobil
Source: TradingView.

ExxonMobil Earnings History

Exxon reported mixed results in its Q4 FY 2021 earnings report. The company's adjusted EPS beat consensus estimates while revenue missed. The company reported its fourth straight quarter of positive GAAP EPS after four consecutive quarters of losses per share. Revenue rose 82.6% year over year (YOY), marking the fourth straight quarter of rising revenue after eight consecutive quarters of declines. The company generated its highest level of cash flow from operating activities since 2012 and strengthened its balance sheet by paying down $20 billion in debt.

In Q3 FY 2021, Exxon's earnings and revenue beat analysts' expectations. The company reported its third consecutive quarter of positive EPS. Revenue rose 59.7% compared to the year-ago quarter, decelerating from the YOY pace of 107.8% set in the previous quarter. The company said that all three of its core businesses generated positive earnings during the quarter. Its oil-equivalent production was up 4% YOY.

Analysts expect continued strength in Exxon's financial performance in Q1 FY 2022. EPS is expected to rise 214.8% YOY, marking the fifth straight quarter of positive EPS. Revenue is expected to expand 56.8% compared to the year-ago quarter, decelerating from the previous quarter's rapid pace. For full-year FY 2022, analysts expect EPS to rise 74.5% on annual revenue growth of 38.8%. It would be the second straight year of revenue growth after two straight years of declines.

ExxonMobil Key Stats
  Estimate for Q1 FY 2022 Q1 FY 2021 Q1 FY 2020
Earnings Per Share ($) 2.01 0.64 -0.14
Revenue ($B) 92.7 59.1 56.2
Upstream Segment Net Income ($B) 8.0 2.6 0.5

Source: Visible Alpha

The Key Metric

As mentioned above, investors will also be focusing on net income for Exxon's upstream segment, which is one of the company's three main business segments. Upstream operations are involved in the exploration and development of oil and natural gas properties as well as the extraction and production of crude oil and natural gas. Upstream may be contrasted with downstream operations, which refer to the production of refined oil products and comprise another one of Exxon's main business segments. Exxon also engages in midstream operations, such as the operation of pipelines and storage facilities.

Exxon's upstream segment benefits from high crude oil prices and suffers when oil prices plunge, as they did during the early stages of the pandemic. But oil prices sharply rebounded last year amid the economic recovery and have moved even higher this year amid the war in Ukraine. Oil prices have shot past $100 per barrel this year, the first time that has happened since 2014.

In FY 2019, just prior to the start of the pandemic, Exxon recorded net income in its upstream segment of $14.4 billion. The situation quickly changed in FY 2020 amid the pandemic when oil prices fell sharply for several months. The upstream segment posted a net loss of $20.0 billion that year. But the segment quickly recovered in FY 2021 amid the economic rebound and rising oil prices, reporting net income of $15.8 billion. Analysts expect net income for the upstream segment to more than triple from the year-ago quarter in Q1 FY 2022. For full-year FY 2022, analysts are currently forecasting upstream net income to more than double to $33.7 billion.

Article Sources
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  2. Bloomberg. "Exxon Is Cutting Even More Costs."

  3. ExxonMobil Corp. "ExxonMobil to release first quarter 2022 financial results."

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