Is ExxonMobil a Sell after Earnings Report?

ExxonMobil had a very mixed Q1 earnings report, with some sales figures looking positive and others  not so much.

The market reacted with a drop of 2.8% for the energy stock on Friday. Since then, the stock has started to climb. It has not made back all of its losses yet, but we are seeing some gradual recovery for this company’s stock price. Today, the XOM stock is up 1.42%.

ExxonMobil hit the share price target that was forecast, with a $2.06 increase per share this last quarter. If that was all the earnings report covered, then the company would be good, but that is not the whole picture.  

Exxon earned $83.1 billion sales for the quarter, which beat expectations as well, which were set at $73.2 billion. Once again, this was good news for the company and showed that it is improving in some key areas.

Where ExxonMobil Fell Short

The biggest negative news out of this earnings report was on the profit side. ExxonMobil had a 28% decrease in profits compared to the previous year. Earnings per share dropped by 26% as well.

Where ExxonMobil has let its shareholders down, at least for now, is in its spending. The company has promised to invest $25 billion in capital ventures in 2024. It will be tough for the company to make sizable profits with that kind of spending.

If that pays off for Exxon in the future, then its stockholders will be happy, but for now, they will have to feel the pinch and see their share prices drop as Exxon hemorrhages money in its attempts to expand the business.

ExxonMobil will be likely to have trouble with its stock price for a while, as the company keeps investing in various ventures and attempting to grow. The stock is not particularly low right now, so it may not yet be the right time to invest, but we do not expect to see a payoff from the proposed spending until perhaps next year. Because Exxon is playing the long game, it would be better for investors to sell this stock for now.