Energy earnings have come in fast and furious over the past two weeks – and their results have not disappointed. This shouldn’t be too much of a surprise, as according to FactSet, the energy sector’s blended earnings growth rate during this period increased to a whopping 290.3%. FactSet also noted that the energy sector has been “the largest contributor to the increase in the earnings growth rate” for the S&P 500 since June 30.
As someone who’s been very bullish on the energy sector over the past few months, I’ve been watching the earnings closely. Well, we finally heard from the biggest energy companies – Exxon Mobil Corporation (NYSE:XOM), Chevron Corporation (NYSE:CVX), and Shell plc (NYSE:SHEL) – so let’s use today’s Market360 to review how well the leaders of the energy sector did…
Exxon Mobil Corporation (NYSE:XOM) – Earnings Reported on Friday, July 29.
Exxon Mobil Corporation (NYSE:XOM) posted exceptional earnings for the second quarter of 2022. Second-quarter earnings surged 73% year-over-year to $17.9 billion, or $4.14 per share, up from $4.7 billion, or 1.10 per share, in the same quarter a year ago. That’s a more than 3x increase! The company achieved revenue of $115.68 billion, jumping from $67.7 billion a year ago.
Exxon CEO Darren Woods said about the earnings: “Earnings and cash flow benefited from increased production, higher realizations, and tight cost control. Strong second-quarter results reflect our focus on the fundamentals and the investments we put in motion several years ago and sustained through the depths of the pandemic.”
Chevron Corporation (NYSE:CVX) – Earnings Reported on Friday, July 29.
Chevron Corporation (NYSE:CVX) reported second-quarter earnings that topped analysts’ expectations on the top and bottom lines. For the quarter, earnings increased 71% year-over-year to $5.82 per share, beating estimates of $5.10 per share and climbing up from $1.71 per share a year ago. Adjusted earnings of $11.4 billion rose from $3.08 billion reported in the second quarter of 2021. And the company announced revenue of $68.76 billion, compared with $36 billion a year ago.
Chevron Vice President and Chief Financial Officer Pierre Breber believes that the company “can do it all,” including “grow the dividend to investors, grow traditional and new energy, pay down debt, and buy back shares.”
I always like to see companies increase dividends and buy back shares. They both increase shareholder value, and dividends provide income at a time when a lot of Americans need it. Chevron currently yields 3.7%, which is solid, but I’ve been hard at work coming up with a more powerful way to generate income, which we talked about yesterday.
Shell plc (NYSE:SHEL) – Earnings Reported on Thursday, July 28.
The second quarter was the second-straight quarter of record earnings for Shell plc (NYSE:SHEL), as elevated energy prices added to its bottom line. Second-quarter earnings soared 518.5% year-over-year to $16.7 billion, up from $2.7 billion in the same quarter a year ago. Adjusted earnings jumped 107.3% year-over-year to $11.5 billion, or $3.08 per share, which topped analysts’ estimates for $2.85 per share. Shell also reported second-quarter revenue of $100.06 billion.
Now that we know the energy companies’ earnings results, let’s see how they stack up in Portfolio Grader…
As you can see, Exxon, Chevron, and Shell are all highly rated, and their stunning results come as little surprise.
As we discussed, I have been bullish on energy since the spring. And based on the earnings reports of the past week, it’s been the right move. And I expect the sector to continue doing well.
Yes, energy stocks were hit with profit taking between June 8 and July 14, as energy prices moderated in the wake of recession fears, massive key interest rate hikes and the fire at the liquified natural gas (NYSE:LNG) hub in Texas. However, crude oil prices have firmed back up, trading near $100 per barrel again, and natural gas prices have resumed their climb higher, rebounding nearly 66% in July.
Now, I expect WTI crude oil prices will moderate in the upcoming months due to seasonality. Every year, as seasonal demand ebbs, energy prices dip in the fall. We’ll likely see crude oil prices decline to about $85 per barrel in September and October. But even with crude oil prices at $85 per barrel, many energy companies will remain profitable.
Natural gas prices, on the other hand, will likely remain persistently high given that Russia continues to play games in Europe. Russia has already stopped supplying gas to France, Poland, Bulgaria, Finland, Denmark and the Netherlands, and it reduced its supplies to Germany and Italy. European Union (EU) members have been advised to cut natural gas consumption “immediately,” as the EU runs the risk of running out of natural gas to heat homes this winter. So, due to all the natural gas supply disruptions, natural gas prices remain much higher than normal.
What this tells me is that crude oil, natural gas and other energy-related companies should continue to thrive and achieve stunning earnings and sales results.
In fact, two of my top picks this week in Accelerated Profits are energy stocks, and all of my August buys are energy plays. And I just added another this week, including a special recommendation on Thursday. Not only did it report triple-digit earnings growth in the second quarter and then rally in the wake of its earnings report, but third-quarter earnings are expected to come in even stronger in October – and that bodes well for the stock price. If things go as I expect, this stock may give us an opportunity to make quick cash in just a few months.
Louis Navellier, Market 360
P.S. We mentioned dividends above. I wanted to let you know that I just launched a bold-new income initiative called The Make Cash Now Project with the goal of showing my readers how they could earn massive cash payments, over and over again.
We’re talking cash payouts of $11,924… $2,040… even $12,427.
And not one or two times per year but 18, 24, sometimes even 30 times per year.
And for a limited time, you can get all the details behind my Make Cash Now Project by going here.
The Editor hereby discloses that as of the date of this email, the Editor, directly or indirectly, owns the following securities that are the subject of the commentary, analysis, opinions, advice, or recommendations in, or which are otherwise mentioned in, the essay set forth below:
Shell plc (NYSE:SHEL)