Why Momentum Investors Will Love These 2 Oil Stocks

VShevron CVX and Exxon Mobil XOM are two of the most recognizable names in the oil and gas industry that currently suit aggressive investors well.

Since the beginning of the year, these two oil giants have experienced very favorable price developments and each of their stock market valuations has increased quite significantly.

Let’s take a closer look at CVX and XOM to better understand why these oil providers might be good options for aggressive investors, by comparing some key financial metrics with data from earnings reports.

Chevron

Chevron’s current market capitalization is around $305 billion and year-to-date the oil giant has risen nearly 35% to a price of $160 per share. The company trades at a beta of 1.13 and has consistently hit all-time highs in 2022.

Since July 2020, CVX has published mixed results. In the past seven reports, CVX has missed estimates four times and beaten estimates three times, and in its latest earnings report, CVX missed the $3.11 estimate by nearly 18%, or 0.55 $.

Analysts expect CVX to reward investors well over the next two years. Over the past 60 days, the consensus estimate trends for FY22 and FY23 have both seen favorable increases. For FY22, the estimated consensus trend is up 22.4%, or $2.21, to $12.10 per share. For FY23, the trend rose nearly 27%, or $2.17, to $10.32 per share.

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Chevron’s earnings have been on a strong streak recently, stringing together four consecutive sales surprises in its last four earnings reports. The average surprise over the past four reports has been around 5.3%, with the most recent sales surprise being around 7% in the last quarter.

Currently, CVX revenue is expected to grow 10.8% for fiscal 2022 and net profit has an expected growth rate of 34% year-over-year. Longer term, CVX is expected to grow its bottom line by around 10% over the next three to five years.

CVX’s current free cash flow sits at $21.1 billion, the highest in five years, and is 110% above its median of $10 billion. The company’s free cash flow is up about 1,200% from a low of $1.6 billion last December.

The oil giant produces billions of liquids a day, which is essential to the success of its business. In its January report, it had a positive 3% surprise on net liquids produced per day, boosting the metric to around 1.8 billion and beating estimates of 1.7 billion.

CVX is currently ranked sixth out of 49 in its industry, with revenues of nearly $163 billion in the last twelve months. The company has a Value Style Score of D, a Growth Style Score of B, and a Momentum Style Score of A. Its overall VGM score is a B and is a Zacks Rank #1 (Strong Buy).

Chevron Corporation Pricing, Consensus, and EPS Surprise

Chevron Corporation Pricing, Consensus, and EPS Surprise

Chevron Corporation price-consensus-eps-surprise-chart | Quote from Chevron Corporation

Exxon Mobil

Year-to-date, Exxon Mobil’s stock price has risen nearly 42% and is trading at about $85 per share, 25% below its all-time high of $105. XOM sits on a higher market cap of $363 billion and has a beta of 1.16.

XOM has consistently exceeded earnings estimates dating back to July 2020; of the last seven reports, six were positive surprises. The oil giant’s average earnings surprise over its past four reports is 5.81%, and in February the company posted an earnings pace of around 4.6%, or $0.09 per share, with net earnings of $2.05 per share.

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Similar to CVX, Exxon Mobil recently saw favorable increases in the consensus estimate trend for FY22 and 23. For FY22, the consensus trend rose 25%, or $1.52, to 7.52 $ per share. The trend is up almost 26%, or $1.35, to $6.56 per share for FY23 as well.

Additionally, XOM has consistently beaten sales estimates in its revenue reports. In its most recent quarter, Exxon exceeded sales estimates by 3.1%, or $2.5 billion. Revenue for FY22 is expected to increase 11%, while net income is expected to increase 21%. Over the next three to five years, XOM expects to see its results increase by 18%.

The company’s current free cash flow is approximately $36 billion, up about 160% from its median of $13.9 billion over the past five years and up 1,200% compared to a negative cash flow value of $3.3 billion in October 2020.

XOM’s $286 billion in revenue over the past twelve months is enough to put it above CVX for third in the industry out of 49. Exxon Mobil currently has a value style score of C, a value style score of of Growth of A and a Style of Momentum Score of A. His overall VGM score is an A and is a Zacks Rank #1 (Strong Buy).

Exxon Mobil Corporation price, consensus and EPS surprise

Exxon Mobil Corporation price, consensus and EPS surprise

Exxon Mobil Corporation price-consensus-eps-surprise-chart | Quote Exxon Mobil Corporation

Capitalize on momentum

Similar to Chevron, XOM’s main success factor is the price of crude oil. With the surge in the price of crude oil, XOM and CVX should greatly benefit during this period and provide plenty of opportunities for aggressive investors.

Exxon Mobil has shown greater strength in recent earnings reports, consistently beating estimates. Meanwhile, CVX struggled to do the same and posted mixed results.

Exxon Mobil beats Chevron in terms of expected EPS growth over the next three to five years, free cash flow and ranks higher in the industry with significantly higher revenue in the last twelve months.

Both names offer great exposure to aggressive investors, but due to these metrics I currently think XOM would be a better buy than CVX.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


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Felix J. Dixon