Earnings are on tap for Exxon Mobil (NYSE:XOM). And at the risk of stating the obvious, the report is a significant one for shareholders. Let’s explore some of what’s happening right now, expectations for the energy giant and whether Exxon Mobil stock will look like a top dog once more. Let me explain.
Before tomorrow’s opening bell, Dow Jones constituent Exxon Mobil is set to release its first-quarter results. But in front of the report, shares are off by 2.5%. Not that Thursday’s weakness is entirely suspect, though, as the broader market is also under pressure by around 1.35%.
But the buck, or in this case the 87 cents, stops there.
Overnight, Exxon Mobil announced it’s freezing the company’s June quarterly dividend payment at 87 cents a share. Given the lowly state of the crude and gas markets, ongoing international production battles and still-undetermined impact of the novel coronavirus on Exxon and the economy at large, the move isn’t exactly a surprise. Still, the hold does break the Dow Jones stock’s uninterrupted streak of April dividend hikes since 2007.
The good news is Exxon Mobil maintains an annual income stream of more than 7.25%. That makes it a top dividend dog in the Dow. The bad news? Exxon Mobil stock isn’t exactly a T-bill. Worse, in recent months Exxon has delivered enough downside volatility to completely unravel those distributed shareholder goodies as the stock plummeted to 16-year dividend-adjusted lows.
What will tomorrow bring to Exxon Mobil stock’s investors? Amid the uncertainty, analysts are forecasting profits of 4 cents per share, according to Zacks. The earnings estimate suggests Wall Street is fully prepared for a decline of nearly 93% from the year-ago period. At the same time, consensus views of $53.8 billion in revenues for the quarter represents a decline of 15.4% from Q1 2019.
Again, and like Exxon’s decision to not raise its dividend, the dismal-sounding forecast is hardly a revelation.
Exxon Mobil Stock Monthly Chart
Source: Charts by TradingView
What might be a surprise is the price action in Exxon shares which took the stock down to its lowest levels since 2004. As the price of oil has continued to hit multi-decade lows in April, Exxon Mobil stock bottomed last month alongside the broader market and blue-chips like Microsoft (NASDAQ:MSFT), Home Depot (NYSE:HD) and Visa (NYSE:V), to name just a few.
Since forging its low, Exxon Mobil stock has also rallied with the best of them too, if not even stronger than most of its peers. Despite Thursday’s pullback, the stock is up roughly 55% from its March 23 intraday low of $30.11.
What’s more, a well-received report tomorrow could go a long ways towards an even more meaningful major bottom in the energy giant’s shares.
Technically, the March low narrowly pierced formidable layers of price and Fibonacci support dating as far back as the late 1970’s and a time when another very different oil crisis was making headline news. I’m willing to give the errant move the benefit of the doubt due to the broader market’s own over-the-top bearish volatility leading into the bottom.
Now, a few weeks later and as we enter a new calendar month, April’s inside candlestick and bullish stochastics signal suggest a “Mayday” call for bulls will be answered. All that’s required is a modest rally above $47.68 to kick off the month of May.
My advice for potential investors is to wait on Friday’s Exxon Mobil stock report. If you like what you’re seeing off and on the price chart at that point, I’d then recommend looking at Exxon’s options market. Specifically, a collar would be a favored strategy to consider. This type spread allows investors to capture upside, enjoy the company’s dividend, smartly limit and reduce downside risk and avoid the real pain associated with always possible future pattern and larger business fall-outs.
Investment accounts under Christopher Tyler’s management do not currently own positions in securities mentioned in this article. The information offered is based upon Christopher Tyler’s observations and strictly intended for educational purposes only; the use of which is the responsibility of the individual. For additional market insights and related musings, follow Chris on Twitter @Options_CAT and StockTwits.