Exxon, Chevron Earnings Preview: Oil Majors Likely to See Sluggish Earnings Growth

The upcoming earnings reports for Exxon Mobil (XOM) and Chevron (CVX) will provide critical insights into the health of the oil sector, as both companies navigate headwinds ranging from geopolitical tensions to refining oversupply. Analysts expect a challenging quarter, with sluggish growth metrics and ongoing uncertainty clouding the outlook for these energy giants.

Exxon: Steady but Stagnant
Exxon’s Q1 2025 earnings, due April 3, are expected to show an EPS of $1.86, modestly above estimates but reflecting a lackluster operating environment. The company’s strong gross profit of $17.25 billion and industry-leading return on equity (2.86%) highlight its operational efficiency. However, its revenue growth has stalled, contracting by 0.77% year-over-year.

Despite these metrics, Exxon’s shares have underperformed over the past year, down 1.38%, underscoring investor skepticism about its ability to sustain growth. The company’s Q4 2024 results, which beat EPS estimates but failed to move the stock price, suggest that even positive surprises may not be enough to reignite investor confidence.

Chevron: Headwinds and Uncertainty
Chevron’s May 2 earnings report is anticipated to reveal deeper struggles. Analysts project a 21.5% YoY drop in EPS to $2.30, with revenue falling 1.8% to $47.9 billion. The Zacks downward revisions—7.6% over 30 days—reflect concerns over the Hess acquisition, which hinges on an arbitration ruling expected in May. A negative outcome could disrupt this $53 billion deal, adding strategic and financial risks.

Downstream operations are another concern. Refining oversupply and declining jet fuel demand are squeezing margins, while geopolitical risks—such as Middle East instability and U.S.-China trade dynamics—threaten oil prices. Chevron’s net margin is projected to decline 1.22% in 2025, worsening its already weaker position compared to Exxon.

Sector-Wide Challenges
The broader energy sector faces a 14.2% YoY earnings decline in Q1, driven by lower oil prices and refining margin pressures. Analysts anticipate a recovery starting in Q4 2025, but near-term risks persist. Macro factors, including a potential U.S. recession and China’s uneven demand rebound, could prolong the pain for Exxon and Chevron.

Peer Comparisons: A Mixed Picture
While Exxon leads in gross profit and ROE, its revenue stagnation contrasts with peers like Shell and TotalEnergies. Chevron, despite its outperform consensus, lags in revenue and margin growth. Both companies’ reliance on North American shale and Gulf Coast refining—vulnerable to oversupply—adds to their vulnerability.

Conclusion: Navigating a Rocky Road
Investors should temper expectations for Q1 2025. Exxon’s 7.86% upside potential to $128.40 and Chevron’s $175.38 price target (47.33% upside) hinge on positive surprises—such as a favorable Hess ruling or an oil price rebound. However, the sector’s 14.2% earnings decline and structural challenges in refining suggest caution.

Long-term investors may find value in Exxon’s balance sheet strength and capital discipline, but Chevron’s risks—including the Hess deal and margin pressures—demand a closer watch. For now, the energy sector’s recovery remains elusive, and oil majors must prove they can navigate a volatile landscape to justify their valuations.

In this environment, patience and a focus on downside protection will be critical. As the data shows, neither Exxon nor Chevron is immune to the sector’s headwinds—a reality investors must not overlook.