Key Insights
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WTI oil stabilized above the $100 level as traders wait for EU sanctions on Russian oil.
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Exxon Mobil and Chevron are valued at 11 – 12 forward P/E.
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Analyst estimates keep moving higher, which should provide additional support to the companies’ stocks.
WTI oil has pulled back from March highs as lockdowns in China put pressure on demand for oil. However, oil-related stocks continue to trade near yearly highs as traders prepare for the impact of the upcoming EU sanctions on Russian oil. In this environment, shares of oil majors may get more support.
Exxon Mobil
Exxon Mobil has recently released its first-quarter report. The company reported revenue of $90.5 billion and adjusted earnings of $2.07 per share, beating analyst estimates on revenue and missing them on earnings.
The company has also announced an increase in its share repurchase program up to a total of $30 billion through 2023.
Currently, the stock is trading at 11 forward P/E. Analyst estimates keep moving higher as analysts realize that high oil prices are here to stay, so Exxon Mobil’s valuation looks conservative.
Chevron
Trading at 12 forward P/E, Chevron is a bit more expensive than Exxon Mobil. The company has recently reported its first-quarter results, missing analyst estimates on both earnings and revenue.
However, analyst estimates continue to move higher at a robust pace, which is bullish for Chevron stock. It’s hard to expect significant multiple expansion for a company like Chevron, but the continued increase in earnings estimates for 22 and 2023 should provide enough support to the company’s shares in the upcoming weeks.
In the near term, traders will need to monitor news from China. In case the situation with coronavirus in the country normalizes, oil will move higher, which will be bullish for Chevron and other oil-related stocks.
For a look at all of today’s economic events, check out our economic calendar.
This article was originally posted on FX Empire
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