Exxon Mobil Corporation (NYSE: XOM) stock dropped 5.5 percent on Friday after higher oil prices didn’t give Exxon profits the boost Wall Street had anticipated in the fourth quarter.
On Friday morning, Exxon reported its highest earnings number since 2014, but it still wasn’t enough to live up to market expectations. Exxon reported earnings per share of 88 cents, excluding impacts from tax reform. Revenue for the quarter was $66.5 billion. Both numbers missed consensus analyst estimates of $1.04 and $74.3 billion, respectively.
Exxon reported full-year 2017 profits of $19.71 billion, the highest number since the global oil market collapsed in mid-2014. Exxon reported a $32.52 profit that year.
[See: 7 of the Best Energy Stocks to Buy for 2018.]
Overall expenses increased by $3 billion in the quarter, but Exxon says it got a $5.9 billion boost from tax reform.
Cash flow from operations was $7.4 billion, flat from a year ago.
Exxon’s upstream exploration and production revenue was up $9 billion from a year ago, while fossil fuel production dropped by 130,000 barrels.
The company’s downstream refining revenue was up $323 million in the fourth quarter. Exxon’s chemicals revenue was also up $398 million from a year ago.
The price of WTI crude oil has gained some traction in recent months thanks to rising global demand for oil and the extension of an OPEC production cut. Exxon CEO Darren Woods says the company intends to take advantage of the recovering oil market and the favorable economic landscape.
“We’re planning to invest over $50 billion in the U.S. over the next five years to increase production of profitable volumes and enhance our integrated portfolio, which is supported by the improved business climate created by tax reform,” Woods says in a statement.
Despite Friday’s disappointment, BK Asset Management analyst Boris Schlossberg says 2018 should be a good year for oil majors Exxon and Chevron Corp. ( CVX).
[See: Oil ETFs: 8 Ways to Invest in Black Gold.]
“If we have this global synchronized economic growth it really is very supportive for oil staying at around $60, maybe even up to $70,” Schlossberg said on CNBC this week. “There’s still a little bit of juice left in both plays because they’ve been such terrible laggards.”
At this point, long-term Exxon shareholders are certainly used to the stock lagging the market. Following Friday morning’s sell-off, Exxon’s share price was down 22.4 percent overall in the past 10 years.
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Exxon Mobil Corporation (XOM) Needs More Than Tax Cuts originally appeared on usnews.com
