Dow Edges Lower; Exxon Mobil Earnings Top Views

The Dow Jones Industrial Average (DJIA) edged lower on Tuesday, as investors digested a mixed bag of corporate earnings and geopolitical tensions weighed on market sentiment. Despite the slight downturn, Exxon Mobil (XOM) shares rose following the company's strong earnings report, which topped analysts' expectations. Let's dive into the details and explore what this means for investors.

Exxon Mobil reported earnings of $33.7 billion for the full year 2024, a 2.3% decrease from the previous year. However, earnings excluding identified items decreased by 5.1% to $33.5 billion. The company's earnings per common share (EPS) came in at $7.84, down from $8.89 in 2023. Despite the decline, Exxon Mobil's earnings still outperformed its peers, such as Chevron (CVX), Shell (SHEL), and TotalEnergies (TTE), which reported EPS of $6.57, $5.23, and $4.85, respectively, in the same period.



Exxon Mobil's strong earnings performance was driven by record production from Guyana and the Permian, as well as record high-value product sales volumes. The company's structural cost savings of $12.1 billion since 2019 also helped offset higher expenses from depreciation, scheduled maintenance, new product development, and 2025 project start-ups. Exxon Mobil's return on capital employed (ROCE) led the industry for the year at 12.7% and for the five-year average at 10.8%.

Investors should take note of Exxon Mobil's commitment to extending its annual $20 billion share-repurchase program through 2026. This indicates the company's confidence in its financial strength and ability to return significant cash to shareholders. Exxon Mobil's total shareholder returns were 11%, 25%, and 14% for the last one, three, and five years, respectively, outpacing the broader energy sector and the S&P 500.

However, investors should also be aware of the risks associated with the energy sector, such as commodity price volatility, geopolitical risks, and regulatory challenges. Exxon Mobil's exposure to carbon-intensive operations may also pose long-term risks related to climate change and potential regulatory pressures.

In conclusion, Exxon Mobil's strong earnings and valuation relative to its peers and the broader energy sector present attractive opportunities for potential investors, given the company's leading ROCE, TSR, and commitment to capital return. However, investors should also be mindful of the risks associated with the energy sector and the company's long-term exposure to carbon-intensive operations. As the DJIA edges lower, investors may find bargain opportunities in Exxon Mobil and other energy stocks, but should remain vigilant and conduct thorough research before making any investment decisions.