is scheduled to report quarterly earnings before the market open on Thursday. Analysts are expecting strong growth within the company's chemicals segment.
Analysts are expecting Exxon to report a quarterly profit of $2.33 a share, compared with a profit of $1.60 in the year-ago quarter. Revenue is estimated to increase to $122 billion from $82.7 billion a year ago, according to a poll of analysts by Thomson Reuters. The company should continue to gain from higher oil prices, higher refining margins, and higher growth from international markets.
The following is taken from a first-quarter report published by
, an independent-research unit of
that uses a quantitative model to evaluate stocks.
Exxon Mobil reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past year. We feel that this trend should continue. During the past fiscal year, Exxon increased its bottom line by earning $6.22 versus $3.98 in the prior year. This year, the market expects an improvement in earnings ($8.76 versus $6.22).
We rate Exxon Mobil a "buy." This is driven by a few notable strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. Our model has a price target of $111 on shares of Exxon Mobil, offering the potential for 31% upside from current levels.
The company's strengths can be seen in multiple areas, such as its robust revenue growth, solid stock price performance, impressive record of earnings per share growth, compelling growth in net income and attractive valuation levels. We feel these strengths outweigh the fact that the company shows low profit margins.
Powered by its strong earnings growth and other important driving factors, this stock has surged by 42% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the stock's future course, although almost any stock can fall in a broad market decline, XOM should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
>>For upcoming earnings and estimates, see our
Exxon's gross profit margin for the first quarter of its fiscal year 2011 has increased when compared to the same period a year ago. The company has also grown sales and net income significantly, outpacing the average growth rates of competitors within its industry.
From a valuation perspective, Exxon Mobil's current price-to-earnings ratio indicates a discount compared to an average of 20.86 for the Oil, Gas & Consumable Fuels industry and a discount compared to the S&P 500 average of 16.45. Conducting a second comparison, its price-to-book ratio of 2.75 indicates a premium versus the S&P 500 average of 2.21 and a significant discount versus the industry average of 6.87. The price-to-sales ratio is below the S&P 500 average and is well below the industry average, indicating a discount.
Equity research manager Chris Stuart, CFA, joined TheStreet Ratings after working as a senior investment analyst with Merrill Lynch covering small-cap equity and alternative investment strategies. Prior to that, Stuart worked for One Beacon Insurance as an actuarial analyst and at H&R Block as a financial adviser. Stuart earned his bachelor's degree in finance from the University of Massachusetts, Amherst. He holds a Chartered Financial Analyst (CFA) designation and is a member of the Boston Security Analysts Society (BSAS) and the CFA Institute.