Buffett’s Exxon Mobil Shares Lower on Earnings Weakness

Exxon Mobil Corp.’s shares reacted early on Thursday when the company reported its fourth-quarter earnings. Ultimately, the earnings were down by about 16%, and this was mostly because of weaker than expected margins in its refining operations as well as lower production.

The company still made a $8.35 billion worth of profit, which otherwise equates to $1.91 per share. Thomson Reuters estimated that the shares would be $1.92, plus the same quarter in 2012 had earnings that $9.95 billion, or $2.20 per share. Overall revenue was down roughly 3% to $110.86 billion, and that was much shorter than the overall consensus estimate of $114.5 billion. Please recognize that many analysts attempt to predict earnings per share, but it’s rare when they look to predict revenue.

Mobile’s exploration and production earnings had dropped about 13% to the $6.8 billion mark, and overall production was down 1.8%. Marketing and refining earnings dropped sharply by 48% to $916 million.

Exxon still managed to spend over $3 billion when buying back stock during the fourth quarter and it will do the same with another $3 billion during the first quarter of 2014.

The Exxon Mobil share price has dropped 0.5% to $95.11 per share on Wednesday, and in early trading on Thursday, they were down another 1.5% to $93.75 per share.

Even though there was an earnings drop, look at the good news – Exxon Mobil’s share price is roughly around where it was when Warren Buffett and Berkshire Hathaway took out such a large stake.

When Buffett purchasing Exxon Mobil shares came to light in early November, the stock was trading at $93.22 per share and it immediately popped to $95.27 per share because of the news. Even though Buffett probably bought in the high 80s or low 90s, this happens to be where the stock rallied from before.