Exxon Mobil and Chevron released fourth quarter earnings this morning, and the market cheered. After a period of misses, this morning’s release was the second consecutive beat of expectations for EPS by Exxon, confirming that Q3 wasn’t just a flash in the pan. Chevron also built on last quarter’s good results. That is welcome news for both companies, but if you dig a little deeper into the numbers and accompanying comments there are some interesting things that can be learned that go beyond the company-specific.
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Obviously, EPS of $1.41 versus expectations for $1.08 at XOM were significant, but it came on revenue of $71.89 billion that was just below the consensus estimate for $72.4 billion. CVX missed expectations slightly on EPS, and also missed on revenue. That suggests that the main story here was one of increased profitability at Exxon, not an industry-wide improvement in market conditions. Investors should therefore avoid extrapolating long-term good news for other big oil companies and the energy sector in general. In fact, some of the details of the Exxon beat actually suggest…
