ExxonMobil (XOM -0.10%) kicked off 2025 on a strong note, beating the market and rallying 10.6% in the first quarter of the year. The oil stock, however, made a sharp U-turn in April to give up all of those Q1 gains, and then some — it fell 11.2% during the month, according to data provided by S&P Global Market Intelligence.
What triggered the reversal in ExxonMobil stock?
Image source: Getty Images.
Trump, oil, and analysts
ExxonMobil stock plunged in the first week of April alongside crude oil prices. President Donald Trump’s sweeping tariffs and a trade war roiled the oil markets, sending prices of Brent and West Texas Intermediate (WTI) crude oil plunging over 15% each in April to nearly four-year lows. Industry experts were already jittery, as they expected the OPEC+ to boost production despite falling oil prices.
As feared, the eight OPEC+ members announced a larger-than-expected output hike of 411,000 barrels per day for June on May 3.
ExxonMobil is the largest oil company in the U.S., and its core upstream earnings and cash flows are tied closely to commodity prices. With oil prices plunging and fears of a recession looming large, several analysts also slashed their price targets on ExxonMobil stock through the month of April, exacerbating the stock’s fall.
Scotiabank analyst Paul Cheng, for instance, slashed ExxonMobil stock’s price target from $140 per share to $115 a share in early April. UBS analyst Josh Silverstein, meanwhile, cut the oil stock‘s price target twice last month to $131 per share. Fears of a slowdown and falling earnings estimates triggered most of these price target cuts.
ExxonMobil, however, just beat analysts’ estimates on its first-quarter earnings.
Is ExxonMobil stock a buy now?
ExxonMobil announced its Q1 numbers on May 2. Although its upstream production jumped 20% thanks to its acquisition of Pioneer Natural Resources last year, ExxonMobil’s earnings fell almost 15% year over year to $1.76 per share because of weak crude oil prices and falling refining margins, among other things. Yet it still beat average EPS estimates of $1.74 per share.
ExxonMobil also continues to generate strong cash flows despite a challenging business environment. In Q1, it generated $13 billion in cash flow from operations (CFO) and $8.8 billion in free cash flow, up 6% and 10% sequentially, respectively. ExxonMobil distributed $9.1 billion to its shareholders during the quarter, including $4.3 billion in dividends and $4.8 billion of share repurchases.
Lower oil prices undeniably hurt ExxonMobil, but the real strength for commodity businesses reflects in their resilience over the long term. ExxonMobil believes it could add over $20 billion in earnings and $30 billion in CFO growth by 2030. It is also a top-notch oil dividend stock, having increased its dividend for 42 consecutive years now and yielding 3.8%.
Neha Chamaria has no position in any of the stocks mentioned. The Motley Fool recommends Bank Of Nova Scotia. The Motley Fool has a disclosure policy.
