Exxon Mobil (NYSE: XOM) shares surged more than 8% following the company's strong Q4 earnings result. The company topped analysts' estimates for earnings although it missed on revenue, issued stronger than expected guidance, and significantly increased its CAPEX plans due to higher oil and gas prices. Another reason for the bullish reaction was its announcement that it would resume buybacks.
The energy sector (NYSE: XLE) is the strongest performer in 2022 by a wide margin following more than a decade of underperforming against technology. Within the energy sector, Exxon Mobil is one of the largest and leading companies. Overall, the stock is up by 63% over the past year and 33% YTD. Despite the stock's recent gains, it continues to offer a very attractive dividend of 4.3% which is significantly above the 10-year yield of 1.6% and the S&P 500's (NYSE: SPY) dividend yield of 1.2%.
Inside the Numbers
In Q4, Exxon Mobil's revenue increased more than 80% year over year to reach $85 billion which was below expectations of $91 billion. It also earned $2.05 per share, beating estimates of $1.93 per share. This was a significant improvement from last year's $0.03 per share in earnings and a sequential improvement from last quarter's $1.58 per share in earnings and $73.8 billion in revenue.
Due to its improving financial position and more bullish outlook on energy prices, Exxon announced that it would be resuming its share buyback program - up to $10 billion over the next 12 to 24 months. The company generated $48 billion in cash flow from operations which is the highest amount since 2012. It also paid down $9 billion in debt and has reduced its debt load back to pre-pandemic levels.
The company also announced plans to restructure the business into 3 units: Upstream, production solutions, and low-carbon solutions in order to enhance effectiveness and reduce costs.
In 2021, Exxon's spending came out to $16.6 billion, and it projects spending between $21 billion and $24 billion in 2022 as the company looks to increase production.