Key Takeaways
- Expansion in the Permian Basin and Guyana boosts production capacity, promising increased revenue from higher output and new profitable sources.
- Strategic focus on high-value product sales, low-carbon investments, and cost efficiencies aims to drive profit margin and earnings growth.
- Dependence on policy incentives, legal disputes, and volatile market conditions pose financial and operational risks to ExxonMobil's future earnings and growth.
Catalysts
About Exxon Mobil- Engages in the exploration and production of crude oil and natural gas in the United States, Canada, the United Kingdom, Singapore, France, and internationally.
- ExxonMobil's plans for increased production in the Permian Basin, with anticipated growth from 1.5 million to 2.3 million oil-equivalent barrels per day by 2030, suggest a significant boost in revenue from higher production volumes.
- Record production in Guyana, with a fast-paced development potentially reaching long-term capacity ahead of schedule, is expected to enhance earnings from new, profitable oil sources.
- The shift towards higher-value product sales in the Product Solutions segment, aided by strategic asset divestitures and new project start-ups, is likely to improve profit margins and thus net earnings.
- Investments in low-carbon solutions, including carbon capture and hydrogen initiatives, supported by strong commercial interest and government policies, aim to position ExxonMobil as a leader in high-growth, high-margin markets decoupled from traditional commodity cycles, impacting future earnings positively.
- The pursuit of efficiencies and cost reductions, expected to deliver $6 billion in savings by 2030, is anticipated to enhance net margins and further support earnings growth.
Exxon Mobil Future Earnings and Revenue Growth
Assumptions
How have these above catalysts been quantified?- Analysts are assuming Exxon Mobil's revenue will decrease by 0.8% annually over the next 3 years.
- Analysts assume that profit margins will increase from 9.9% today to 11.5% in 3 years time.
- Analysts expect earnings to reach $38.4 billion (and earnings per share of $9.38) by about March 2028, up from $33.7 billion today. However, there is some disagreement amongst the analysts with the more bullish ones expecting earnings as high as $44.0 billion.
- In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 22.1x on those 2028 earnings, up from 15.0x today. This future PE is greater than the current PE for the US Oil and Gas industry at 13.1x.
- Analysts expect the number of shares outstanding to grow by 7.0% per year for the next 3 years.
- To value all of this in today's terms, we will use a discount rate of 7.37%, as per the Simply Wall St company report.
Exxon Mobil Future Earnings Per Share Growth
Risks
What could happen that would invalidate this narrative?- ExxonMobil's reliance on government policy incentives, such as those under Section 45V of the Inflation Reduction Act for its Baytown low carbon hydrogen project, indicates a risk if such incentives are withdrawn, potentially impacting future earnings and project viability.
- The ongoing legal dispute with the California Attorney General and activist groups over the advanced recycling business highlights regulatory and reputational risks that could hurt revenue and profitability, especially if it deters investment or leads to increased legal costs.
- Market conditions remain volatile, with ExxonMobil acknowledging that softer conditions affected their $34 billion earnings in 2024; any prolonged downturns could adversely impact revenue and profit margins.
- The chemical market is highlighted as challenging due to margin pressures significantly below the long-term average, which could constrain profitability from this segment if conditions don't improve.
- Potential tariffs on North American operations could disrupt upstream and downstream operations, possibly affecting cost structures and thereby future earnings.
Valuation
How have all the factors above been brought together to estimate a fair value?- The analysts have a consensus price target of $129.099 for Exxon Mobil based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $146.0, and the most bearish reporting a price target of just $105.0.
- In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be $332.4 billion, earnings will come to $38.4 billion, and it would be trading on a PE ratio of 22.1x, assuming you use a discount rate of 7.4%.
- Given the current share price of $116.59, the analyst price target of $129.1 is 9.7% higher.
- We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.
How well do narratives help inform your perspective?
Disclaimer
Warren A.I. is a tool utilizing a Large Language Model (LLM) that ingests data on consensus price targets, forecasted revenue and earnings figures, as well as the transcripts of earnings calls to produce qualitative analysis. The narratives produced by Warren A.I. are general in nature and are based solely on analyst data and publicly-available material published by the respective companies. These scenarios are not indicative of the company's future performance and are exploratory in nature. Simply Wall St has no position in the company(s) mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The price targets and estimates used are consensus data, and do not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that Warren A.I.'s analysis may not factor in the latest price-sensitive company announcements or qualitative material.
Read more narratives

ExxonMobil's Focus On Margins Rather Than Growth Will Help It Cash In On Tight Supply
