Jim Cramer Says Chevron Beats Exxon. Earnings Will Put That to the Test

Quick Read

• Cramer called CVX the better buy over XOM, yet both stocks have moved nearly in tandem, with Exxon up 48% and Chevron up 47% year to date.

• Wall Street expects Chevron’s Q3 EPS to surge 161% to $4.83, outpacing Exxon’s projected 112% jump to $3.98.

• Chevron signed a 20-year deal to supply Microsoft’s Project Kilby with 2.67 gigawatts of behind-the-meter power, with a final investment decision expected this year.

• Just released. Our analysts combed the entire stock market and named the ten best stocks to buy right now, and Exxon Mobil didn’t make the cut. Enter your email to see the names that beat XOM. The report is free. Enter your email and see if any of your stocks made the cut.

ExxonMobil (NYSE:XOM) and Chevron (NYSE:CVX) both report third-quarter results before the open on October 30. Because the two reports land back to back, they give a clean test of Jim Cramer’s October 15 call on Mad Money.

“I think Exxon’s good. I think Chevron’s better. I would make that swap unless you have some tax implications. CVX is a better way to go,” Cramer said. This year, the two stocks have moved almost in tandem. Exxon is up 48.4% year to date, and Chevron is up 47.0%.

Chevron Absorbed the Middle East Shock Better

Darren Woods, Exxon’s board chair and chief executive, reported second-quarter earnings of $14.5 billion and operating cash flow of $23.6 billion, even though the Middle East conflict temporarily knocked out about 10% of upstream production. Woods also pointed to Guyana output near 900,000 barrels per day, record Permian volumes above 1.8 million oil-equivalent barrels per day, more than $9 billion returned to shareholders, and $16.3 billion in cumulative cost savings since 2019. “Stepping back, the second quarter was shaped by disruption, but defined by execution,” he said.

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Chevron CFO Eimear Bonner reported adjusted EPS of $6.06 and adjusted free cash flow (the cash left over after capital spending) of $15.4 billion, with only about 1% of production affected by the conflict. Mike Wirth, who spoke as chair and CEO, cited record U.S. upstream output of nearly 2.1 million barrels of oil equivalent per day and $3 billion in structural cost cuts reached six months early. “Amid geopolitical uncertainty and market volatility, Chevron delivered a strong second quarter,” Wirth said.

Wall Street Expects Earnings to More Than Double

Quarterly growth figures compare with year-ago adjusted EPS of $1.88 for Exxon and $1.85 for Chevron.

Lost Barrels, a Fifth FPSO, and Project Kilby

For Exxon, three things matter:

• Whether the lost Middle East production has come back

• When Guyana’s fifth FPSO (a floating production, storage, and offloading vessel) starts up

• How chemical and refining margins held up

Power is Chevron’s key variable. Jeff Gustavson, president of Chevron New Energies, described a 20-year take-or-pay deal to supply Project Kilby, a Microsoft (NASDAQ:MSFT) project, with 2.67 gigawatts of behind-the-meter power, meaning electricity generated on site for the customer. A final investment decision is expected later this year. Benefits from the Hess acquisition also matter, along with progress toward Bonner’s goal of 2% to 3% annual production growth through 2030.

Skeptics have a case. A guest on CNBC’s Fast Money said that oil services stocks have lagged so far behind the majors that Exxon and Chevron look “increasingly extended.” A Halftime Report panelist pushed back, citing Saudi Aramco’s view that rebuilding global inventories could take two years or more. The panelist added that even at $75 a barrel West Texas Intermediate crude, “these companies are going to mint money.”

Six Numbers Will Decide Whether the Swap Holds

For Exxon, the key figures are:

For Chevron, they are:

If Chevron again outpaces Exxon on cash while Exxon’s lost barrels stay offline, the case for Cramer’s trade gets stronger. A full Exxon recovery would close that gap quickly, which gives Cramer’s own tax warning extra weight for longtime holders.

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