Exxon-Mobil earnings could please the bears

Look for Exxon-Mobil's (XOM) first-quarter earnings report before the market opens Thursday to settle a tug-of-war between the institutional bulls and bears.

The bulls feel Exxon-Mobil's outlook is turning positive, due to firming oil prices and stable refining margins, particularly for gasoline. The bears argue that Exxon-Mobil is likely to post sequentially lower quarterly earnings results for at least all of fiscal 2009, due to a high inventory levels for oil globally, and on sentiment that the U.S. and global economies will not to begin to recover before the fourth quarter.

The First Call Q1 revenue and earnings per share estimates for Exxon-Mobil are $54.0 billion and 94 cents. The First Call F2009/F2010 earnings per share estimates are $4.20/$5.95.

Earlier this month, Barclay's Capital lowered its first-quarter and fiscal 2009 earnings per share estimates for Exxon-Mobil to 86 cents/$3.65 from 94 cents/$4.15, citing changed refining margin assumptions and natural gas price assumptions.

What does Exxon-Mobil's chart tell us? Technically, the stock appears to be a bear hug. That's where the stock price declines, then rises to hug the critical 50-day moving average, before declining more.

Stock Analysis: Exxon-Mobil is well-equipped to handle potential, continued sluggishness in oil prices, and it's hard to argue with a good earnings history and a strong balance sheet. Still, it's likely that only a major (+10 percent) first-quarter earnings per share beat will enable Exxon-Mobil to stay above its 50-day moving average, $68, in the near term. Hence, if you already own the stock, it is a Hold. If you don't, it's a Don't Buy.

I'll revisit this analysis after Exxon-Mobil reports first-quarter earnings on Thursday, April 30.

Disclosure: Lazzaro has no positions in stocks, but does own shares in two Pimco Bond Funds: PHDAX and PYMAX.

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