Exxon Mobil May Be Exceedingly Mobile

Jul.13.14 | About: Exxon Mobil (XOM)


Exxon Mobil's stock has outpaced the firm's revenue growth.

Exxon is trading at a historically high price-to-earnings ratio.

Demand for oil appears to be hovering around the middle of its historic price.

Exxon Mobil (NYSE:XOM) is the quintessential American company. The firm is descended from Standard Oil, an oil behemoth managed and grown by the legendary John D. Rockefeller. The firm nowadays is a publicly-traded behemoth, a flagship of the oil market and an issuer of securities held by a very significant portion of the American population. The firm's stock has appreciated well during the last several years, with the stock climbing from the mid 60s to the $101 where it stands today. We have to take a look at Exxon's fundamentals to see if there's more opportunity in the stock.


Exxon Mobil has a market capitalization of $437 billion, making it the second largest publicly-traded firm in the world. On top of this, the firm has staggering revenues of over $100 billion a quarter. Although Exxon has had less than stellar revenue growth over the last several quarters, investors still see serious future value in the stock, as evidenced by the graph below.

Click to enlargeSource: YCharts

Although Exxon's revenue has behaved in a funky matter, the firm has managed to keep its net income very in-line. During this time period, Exxon has accrued assets and liabilities at a similar rate, indicating a balanced growth outlook by senior management.

Click to enlargeSource: YCharts

Exxon Mobil is also trading at a historically high price-to-earnings ratio, a common indicator of how fundamentally expensive the stock is:

Click to enlargeSource: YCharts

This, along with the lukewarm revenue behavior, may indicate that Exxon is somewhat overbought with the stock. Owing to its bellwether nature and massive presence, many people could see Exxon as a blue chip entry point to the rising equity markets. Fundamentally, some of this increase may be unfounded.

The firm will begin to take in greater profits if there is a shift in oil demand. If, for some reason, world oil supply goes down, Exxon could sell its product for more money. An index of the going price of oil is a 1-year crude oil contract. As seen below, oil is believed to be priced moderately in the time to come, as the future is oscillating towards the middle.

Click to enlarge

Source: YCharts


Exxon Mobil has been bought heavily since the markets dropped back in 2007. The firm is a behemoth of American business and a centerpiece on the world economic stage. Exxon, however, has not had the revenue that it could have; this could be tied to the going rate for oil, an increase in which would fuel a very healthy quarter for the firm. If you believe that there could be reasons for America to get more involved in the oil market within the future, then Exxon is a good buy.

Disclosure: The author has no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. The author wrote this article themselves, and it expresses their own opinions. The author is not receiving compensation for it (other than from Seeking Alpha). The author has no business relationship with any company whose stock is mentioned in this article.