Second-quarter earnings rode a one-time squeeze in diesel and a $114 Brent. Twelve-month earnings should settle near $42 billion. At 14 times that, the stock is $147.
Key points
- $14.5 billion of June-quarter net income, more than double the prior four-quarter average, came from prices and refining, not extra barrels.
- Brent $114 and Gulf Coast diesel near $5 a gallon set the print; Middle East production was still about 10% offline.
- 14 times next-twelve-month earnings of $10.53 a share is $147, 10% below $164.05.
The call
The $164.05 price needs about $11.70 of earnings at a 14 times multiple, or today’s $8 TTM run-rate to be treated as permanent. That only holds if Brent stays near $114 and refining capacity stays missing for a full year.
I expect Brent and diesel margins to ease as Hormuz traffic and Qatar trains recover, so 2027 earnings land near $42 billion. Guyana’s fifth vessel and Permian laterals add cash, but entitlements fall as costs recover. Buybacks trim shares to 3.99 billion.
Net income by quarter ($ billions)Company releases through June 2026; Q3 2026E–Q2 2027E are the desk’s forecasts
Valuation
| Item | Figure |
|---|
| Next-twelve-month net income | $42 billion |
| Shares after $20 billion buybacks | 3.99 billion |
| Earnings per share | $10.53 |
| Multiple | 14 times |
| 12-month target | $147 |
Fourteen times is a full-cycle integrated multiple, not a war-premium. If I am right on earnings, the downside is about $17 a share; if prices stay elevated, the stock can sit near $165. That skew favors a sell, not a hold.
From today’s price to the 12-month targetDesk arithmetic, October 8 2026
Risks
- Hormuz stays closed and diesel stays near $5, keeping Energy Products earnings at second-quarter levels.
- Permian recovery technology fails to offset Guyana entitlement decline.
- Ten-year yields at 5.3% force a 12 times multiple even if earnings hold.
What would change my mind
A December-quarter print still above $12 billion of net income with Brent still above $100 would force a higher run-rate.