Should Investors Buy Chevron Or Exxon Mobil Stock Ahead Of Q1 Earnings?

With crude oil prices recently edging toward $80 a barrel investors may be wondering if it's time to buy Chevron (CVX) or Exxon Mobil (XOM) stock before their first-quarter earnings reports on Friday, April 28.

The two oil giants have the ability to profit immensely from higher oil prices which can typically rise ahead of the summer months as energy usage increases along with travel.

With that being said, let's see what's in store for Chevron and Exxon stock ahead of their Q1 Results.  

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Recent Performance & Valuation

Chevron and Exxon are two of the largest integrated oil and gas companies in the world and looking at the recent performance in their stocks and current price-to-earnings valuation can help gauge if there is more upside before we dive into their outlooks.

In this regard, Exxon stock is up +6% year to date to top Chevron's -6% but both oil giants have trailed the S&P 500's +8%. However, over the last two years, Exxon is still up +109% with Chevron up +66% to crush the benchmark as oil prices and other commodities soared amid rising inflation.

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Chevron and Exxon stock both trade at 11.9X forward earnings which is nicely beneath the S&P 500's 19.2X but above the industry average of 5.7X.

Still, Chevron and Exxon are global energy leaders and trade attractively relative to their past. To that point, both stocks trade well below absurd decade-long highs and offer a 33% discount to their respective medians of around 17.7X.   

Chevron Q1 Preview

Chevron's first-quarter earnings are expected to be virtually flat year over year at $3.36 per share. Sales for Q1 are projected to decline -12% YoY to $47.64 billion. Notably, the Zacks Expected Surprise Prediction ESP indicates that Chevron could slightly top its Q1 earnings expectations with the Most Accurate Estimate having EPS at $3.38 per share and slightly above the Zacks Consensus.

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Annual earnings are now expected to drop -23% this year at $14.39 per share after a tough-to-compete-against year with EPS at $18.83 in 2022. Fiscal 2024 earnings are expected to stabilize and rise 7%. Total sales are forecasted to be down -15% this year and then rise 4% in FY24 at $215.69 billion

Exxon Q1 Preview

Pivoting to Exxon, Q1 earnings are projected to jump 28% at $2.65 per share compared to EPS of $2.07 in the prior-year quarter. First-quarter sales are expected to rise 6% YoY to $96.04 billion. The Zacks ESP indicates Exxon could also beat its Q1 earnings expectations with the Most Accurate Estimate having EPS at $2.67.

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Overall, annual earnings are still expected to drop -29% this year at $9.90 per share as Exxon is also up against a tough-to-follow year with 2022 EPS at $14.06. Fiscal 2024 earnings are expected to be virtually flat. On the top line, FY23 sales are now forecasted to drop -10% and then stabilize and rise 1% in FY24 at $378.50 billion.

Takeaway

Chevron and Exxon stock both land a Zacks Rank #3 (Hold) leading up to their first quarter results. Despite the expected dip in their annual top and bottom lines these oil giants still trade attractively relative to their past and offer solid dividend yields above 3%.

Plus, crude oil prices are largely up over the last month but more upside in Chevron and Exxon stock will depend on their ability to capitalize on this and offer better-than-expected guidance during their Q1 reports.   

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