ExxonMobil (XOM -0.36%) is the oil industry's leader by almost every important metric, including profitability. The oil giant produced a peer-leading $8.6 billion in profits during the third quarter and a monster $17.6 billion of cash flow from operations, which also led international oil companies.

However, the fourth quarter proved to be more challenging for the oil giant as it issued a profit warning for the period. Here's a look at whether that's a concern or if investors should buy the oil stock on its profit dip.

Drilling down into the fourth quarter

ExxonMobil recently gave investors a preliminary glimpse at its upcoming fourth-quarter earnings report, which it plans to release at the end of the month. The oil giant expects to report $1.76 per share of earnings in the period, well below analysts' expectations. It's also below the $2.48 per share it posted in the year-ago period and the $1.92 per share it earned during the third quarter.

The oil giant battled several headwinds during the period. The biggest came in refining. Lower margins reduced earnings by $300 million to $700 million in the period. Timing also impacted its refining business, cutting an additional $500 million to $900 million from the bottom line. Gasoline demand was weaker than expected, while new refineries in Asia and Africa boosted supply.

Another issue that weighed on Exxon's profits in the period was impairments. The company disclosed that it would take about $600 million in charges during the period. It also expects lower margins in its chemicals business to reduce earnings by roughly $400 million.

These headwinds offset the strength of the company's upstream oil and gas production business. Exxon expects earnings from that segment to increase by around $400 million despite a 6% decline in oil prices during the period. Exxon benefited from a roughly 30% rebound in the price of natural gas in the U.S.

Time to worry or time to buy?

Market conditions had a notable impact on Exxon's earnings during the fourth quarter. However, while its earnings declined during the period, it's still in a class of its own. Further, the company expects to improve its already industry-leading profitability in the future.

The company recently revealed its 2030 plan. It aims to deliver an incremental $20 billion in earnings and $30 billion in free cash flow by 2030. Several factors will fuel that ambitious plan, including:

  • Pioneer Natural Resources: Exxon expects the annual synergies from its recently closed acquisition of Pioneer to be 50% more than initially expected, or about $3 billion.
  • New business: The oil company expects to grow the earnings from new businesses (e.g., lithium, carbon capture and storage, and others) to $3 billion.
  • Structural cost savings: Exxon is adding $7 billion to its structural cost savings target.
  • High-return capital investments: The company plans to deploy $140 billion over the next several years into major capital projects developing the Permian Basin. These investments should generate returns above 30% by growing its high-margin production from advantaged assets and high-value products.  

Exxon's strategy has it on track to produce a massive $165 billion in surplus cash after covering its investment program by 2030. That will give it the money to continue increasing its dividend, which it has done for 42 straight years. It will also enable the company to continue buying back a boatload of its stock. Assuming reasonable market conditions, it plans to repurchase $20 billion of its shares in 2025 and 2026.

That combination of earnings and cash flow growth, along with increased capital returns, positions Exxon to create significant value for investors over the coming years. The company's strategy will help make it less susceptible to swings in commodity prices by significantly increasing its margins, growing earnings from more resilient businesses, and delivering durable cost savings.

An attractive entry point for this top-tier oil stock

Weaker market conditions cut into Exxon's profits during the fourth quarter. They've also weighed on its stock price, which currently sits about 15% below its 52-week high. That dip looks like a great buying opportunity for long-term investors, given all the growth the oil giant has coming down the pipeline.