Market Capitalization: $514.57 Billion
Enterprise Value: $539.16 Billion
Shares Outstanding: 4.44 Billion
Sector: Energy
Industry: Oil & Gas Integrated
Analysis as of: September 27, 2024

1. Company Overview

Exxon Mobil Corporation (NYSE: XOM) is one of the world’s largest publicly traded international oil and gas companies. Founded in 1870 and headquartered in Spring, Texas, Exxon Mobil engages in the exploration, production, transportation, and sale of crude oil and natural gas. The company operates through several segments:

• Upstream: Exploration and production of crude oil and natural gas.
• Energy Products: Offers fuels, aromatics, and catalysts, selling products under Exxon, Esso, and Mobil brands.
• Chemical Products: Manufactures and markets petrochemicals including olefins, polyolefins, and intermediates.
• Specialty Products: Provides lubricants, basestocks, waxes, synthetics, elastomers, and resins.

Exxon Mobil also invests in lower-emission business opportunities, such as carbon capture and storage, hydrogen, and biofuels.

2. Financial Performance

a. Revenue and Growth

• Trailing Twelve Months (TTM) Revenue: $345.14 Billion
• Year-over-Year (YoY) Revenue Growth (TTM): -5.94%

Revenue Trend (Selected Years):

Analysis:
Exxon Mobil’s revenue has been volatile over the past few years, primarily due to fluctuations in global oil and gas prices and the impact of the COVID-19 pandemic. After a significant decline in 2020, revenue rebounded strongly in 2021 and 2022. However, the TTM revenue shows a decrease of 5.94%, indicating a recent downturn, possibly due to lower commodity prices or decreased demand.

b. Profitability

• Net Income (TTM): $34.16 Billion
• Earnings Per Share (EPS, TTM): $8.35
• Profit Margin: 9.90%
• Return on Equity (ROE): 14.69%
• Return on Assets (ROA): 7.35%
• Return on Invested Capital (ROIC): 10.67%

Analysis:
Despite the decrease in revenue, Exxon Mobil remains profitable, with a net income of $34.16 billion. The profit margin of 9.90% is robust for the industry. The ROE of 14.69% indicates effective use of shareholder equity, while ROA and ROIC suggest efficient use of assets and invested capital to generate earnings.

c. Cash Flow

• Operating Cash Flow (TTM): $54.87 Billion
• Capital Expenditures (CapEx): -$22.46 Billion
• Free Cash Flow (FCF): $32.41 Billion
• Free Cash Flow Per Share: $7.30
• FCF Margin: 9.39%

Analysis:
Exxon Mobil generates strong operating cash flow, reflecting its ability to convert revenue into cash. After accounting for capital expenditures, which are significant due to the capital-intensive nature of the industry, the company still maintains a healthy free cash flow. This positive FCF supports dividend payments, debt reduction, and potential share repurchases.

d. Balance Sheet

• Total Assets: $460.71 Billion
• Total Liabilities: $184.44 Billion
• Total Debt: $43.19 Billion
• Cash & Cash Equivalents: $26.46 Billion
• Net Debt Position: -$16.73 Billion
• Current Ratio: 1.36
• Debt-to-Equity Ratio: 0.16
• Altman Z-Score: 3.98 (Indicates low risk of bankruptcy)

Analysis:
Exxon Mobil has a solid balance sheet with a total debt of $43.19 billion and cash reserves of $26.46 billion, resulting in a net debt of $16.73 billion. The current ratio of 1.36 indicates good short-term liquidity. A low debt-to-equity ratio of 0.16 suggests conservative leverage, enhancing financial stability. The Altman Z-Score of 3.98 reflects strong financial health.

3. Valuation

• Price-to-Earnings (PE) Ratio (TTM): 13.86

• Forward PE Ratio: 14.16
• Price-to-Sales (PS) Ratio: 1.37
• Price-to-Book (PB) Ratio: 1.92
• Price-to-Free Cash Flow (P/FCF) Ratio: 15.88
• PEG Ratio: 2.50
• Enterprise Value (EV): $539.16 Billion
• EV/EBITDA: 7.60
• EV/EBIT: 11.12

Analysis:

• PE Ratios: The PE ratio of 13.86 is relatively low, indicating that the stock may be undervalued compared to the broader market.
• PS and PB Ratios: The PS ratio of 1.37 and PB ratio of 1.92 are reasonable, suggesting the stock is fairly valued based on sales and book value.
• P/FCF Ratio: At 15.88, the P/FCF ratio shows investors are paying a moderate premium for the company’s free cash flow.
• PEG Ratio: A PEG ratio of 2.50 may indicate that the stock is overvalued relative to its earnings growth rate.
• EV Multiples: EV/EBITDA of 7.60 and EV/EBIT of 11.12 are within industry norms, suggesting the company’s valuation is reasonable.

Conclusion:
Exxon Mobil’s valuation metrics suggest that the stock is fairly valued or slightly undervalued, offering potential investment opportunities for value-oriented investors.

4. Market Performance

• Current Stock Price: $115.82
• 52-Week Range: $95.77 – $123.75
• 52-Week Price Change: -0.51%
• Beta: 0.88
• Average Volume (20 Days): 15,990,521
• Relative Strength Index (RSI): 52.40
• Dividend Yield: 3.28%
• Ex-Dividend Date: August 15, 2024

Analysis:
Exxon Mobil’s stock price has decreased slightly over the past year. The beta of 0.88 indicates lower volatility compared to the market. The RSI near 50 suggests neutral momentum. A dividend yield of 3.28% adds to the stock’s attractiveness for income-focused investors.

5. Financial Health and Risks

a. Liquidity

• Current Ratio: 1.36
• Quick Ratio: 0.98

Analysis:
The current ratio above 1 indicates that Exxon Mobil can cover its short-term liabilities with its short-term assets. The quick ratio close to 1 suggests adequate liquidity without relying heavily on inventory.

b. Leverage

• Debt-to-Equity Ratio: 0.16
• Debt-to-EBITDA Ratio: 0.58
• Interest Coverage Ratio: 51.96

Analysis:
Exxon Mobil’s leverage is low, with a debt-to-equity ratio of 0.16 and a debt-to-EBITDA ratio of 0.58, indicating manageable debt levels. The high interest coverage ratio shows that the company can easily meet its interest obligations.

c. Operational Risks

• Commodity Price Volatility: Exxon Mobil’s revenues and profits are highly sensitive to oil and gas price fluctuations.
• Regulatory and Environmental Risks: The company faces regulatory risks related to environmental policies, emissions standards, and potential carbon taxes.
• Transition to Renewable Energy: Global shifts toward renewable energy sources may reduce long-term demand for fossil fuels.
• Capital-Intensive Operations: High capital expenditures are required for exploration, production, and refining activities.

d. Market Risks

• Global Economic Conditions: Economic downturns can reduce energy demand, impacting revenue.
• Geopolitical Risks: Operations in politically unstable regions may be subject to disruptions.
• Competition: Intense competition from other integrated oil companies and alternative energy providers.

e. Dividend Policy

• Dividend Per Share (TTM): $3.80
• Dividend Yield: 3.28%
• Payout Ratio: 45.49%
• Years of Dividend Growth: 43

Analysis:
Exxon Mobil has a strong history of dividend payments, with 43 years of consecutive dividend growth. The payout ratio of 45.49% indicates that dividends are well-covered by earnings, suggesting sustainability.

6. Conclusion

Pros:

• Strong Financial Position: Solid balance sheet with low debt levels and high liquidity.
• Consistent Profitability: Maintains profitability even during revenue downturns.
• Attractive Dividend: Offers a compelling dividend yield with a long history of growth.
• Valuation: Reasonable valuation metrics may present a buying opportunity.

Cons:

• Revenue Volatility: Dependent on commodity prices, leading to potential revenue fluctuations.
• Regulatory Risks: Environmental regulations and climate change policies may impact operations and profitability.
• Energy Transition: The global shift toward renewable energy poses long-term challenges to traditional oil and gas companies.
• Capital Expenditure Requirements: High CapEx needs may limit free cash flow available for other purposes.

Disclaimer:
This analysis is for informational purposes only and does not constitute investment advice. Investing in securities involves risks, including the potential loss of principal. Past performance is not indicative of future results. Investors should conduct their own research or consult a financial advisor before making investment decisions.