ExxonMobil is climbing in a base and is back above a closely watched moving average. Can ExxonMobil stock reclaim the throne of the energy industry? Or has the stock peaked?
Exxon stock rose for six straight sessions. In its second attempt, shares climbed off the bottom of a flat base with a 123.75 buy point. Shares are rising along with the recent increase in oil prices.
Energy stocks may get a lift if former President Donald Trump wins the upcoming presidential election. He claims he will bring down oil prices with more U.S. oil and gas drilling. "We have more liquid gold than anybody," he said in a Bloomberg article. And one of his campaign mottos is "Drill, baby, drill," referring to oil drilling.
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 4% of the S&P 500 as of May 2024. And Chevron continues to battle ExxonMobil for leadership of the energy industry, as do foreign oil giants such as Shell and BP.
Rising crude oil futures lifted energy stocks from January lows to levels in early April not seen since October. Prices tumbled to three-month lows in June then climbed until early July, when they reversed lower.
The average price of gasoline across the U.S. on Wednesday was $3.51 per gallon vs. $3.56 one year ago, according to AAA data. West Texas Intermediate (WTI) oil prices lifting to just over $83 a barrel on Wednesday.
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.
Exxon reported lower-than-expected adjusted first-quarter earnings and higher sales than expected on April 26.
First-quarter adjusted EPS fell 27% from the prior year to $2.06 per share, while sales dropped 4% to $83.1 billion.
The oil giant had been one of one of America's most profitable companies. However, Q1 was the second-straight quarterly report in which EPS fell 27%. That followed EPS drops of 53% and 49% the previous two quarters, for a total of seven straight quarters of slowing or declining profits.
At the same time, the quarterly sales drop in Q1 followed declines of 28%, 19% and 12% in the prior three quarters.
FactSet estimates, however, show second-quarter profit turning around and rising 6% on a 9% sales increase. Analysts expect 2024 EPS to drop to $8.82 from $9.52 in 2023, then rise to $9.52 in 2025, according to MarketSurge. Exxon is expected to report second-quarter earnings in early August.
XOM stock's Composite Rating is a mediocre 62and its EPS Ratings is 69.
The stock holds an Accumulation/Distribution Rating of B-, indicating a fair amount of institutional buying over the last 13 weeks. The stock's annualized dividend yield is around 3.2%.
XOM Stock Technical Analysis
ExxonMobil stock is in a flat base with a 123.75 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. The drop started the new flat base. The stock reclaimed its 50-day moving average July 15, in its latest rally.
It will be telling when it gets to the 120 level, as the stock faces resistance around that price going back to November 2022. Its weekly MarketSurge chart now shows five breakouts that have stalled or failed.
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 improving but it is not currently a buy. 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.
