RESEARCHXOM22 days ago13.7Kviews

Exxon: refining margins normalised faster than guidance admits

Crack spreads have already normalised. The earnings model has not been updated for it.

Olivia Grant@olivia_grant

Evidence · 4 cards

The case

Exxon: refining margins normalised faster than guidance admits

Crack spreads have already normalised. The earnings model has not been updated for it.

The edge

The Street says

Consensus models the cycle turning in the second half
Sell-side target clusters within 8% of spotAuto

I say

The turn already happened in order intake two quarters ago
My number is 14% above the street on the out yearCreator est.

Path to target

Entry: 130.65Auto
Out-year EPS: +18% vs consensusCreator est.
Exit multiple: 22x, in line with the last cycle peakCreator est.
= Target: 107.11Creator est.

Catalyst timeline

JUL 18, 2026 · PAST
Q results, margin guide reiterated
AUG 12, 2026 · PAST
Analyst day, capex framework updated
SEP 11, 2026
Next print, the number that decides this

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Discussion · 10

Sam WhitfieldAUG 21

Finally someone put numbers on this. The comp table did more work for me than the narrative did. Has anything in the last print changed the entry you would take?

Olivia GrantAuthorAUG 21

Honestly, that is the weakest part of the piece. The comp table took longer than the rest of the piece put together, so I am glad it was the useful part.

Yael BrennerAUG 21

I have been waiting for someone to make this argument. The regulatory ceiling being quantified changes the model, not just the headline. Interested in what the kill switch looks like in practice.

Dana KatzAUG 21

I think the setup matters more than the thesis here. The lag between intake and revisions is the whole trade. Does the thesis survive a soft guide next quarter?

Olivia GrantAuthorAUG 21

You are right that I skipped over that. The macro has to be neutral rather than helpful. If it is actively hostile this does not work and nothing in the position hedges that.

Dana KatzAUG 21

This is the second-order point everyone skips. The comp table did more work for me than the narrative did. Interested in what the kill switch looks like in practice.

Omri ShakedAUG 21

Finally someone put numbers on this. The destocking signature is textbook and nobody is naming it. What does the bear actually have to be right about?

Dana KatzAUG 21

Thanks for showing the workings. The destocking signature is textbook and nobody is naming it. What does the bear actually have to be right about?

Noa BergmanAUG 21

I think the setup matters more than the thesis here. The cohort split is the detail that everyone leaves out. Does the same logic apply to the closest comparable?

Olivia GrantAuthorAUG 21

Reasonable, and I have thought about it a lot. Rates hit the multiple rather than the earnings path. A 50bp move costs perhaps two turns and does not touch the thesis.