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- Exxon Mobil is a good long-term investment in a dividend growth stock.
- Exxon Mobil has shown considerable earnings per share surprise in each one of the last three quarters, and according to its historical valuation multiples, the stock is significantly undervalued.
- Exxon Mobil is generating strong cash flows and returns value to its shareholders by stock buyback and increasing dividend payments.
- Dividend Challenger Exxon Mobil yields 2.9% at a price of $95.11 and has a reasonable five-year CAGR of 9.7%. It trades at a discount of 5% to my fair value estimate.
- Along with other energy sector companies, XOM is challenged by a weaker commodity price environment.
- The company's aggressive share buybacks and its dividend commitments are not sufficiently covered by the free cash flow it is generating, which could inhibit future dividend growth.
- Exxon Mobil's shares are down 5% since the beginning of the year.
- Falling oil prices are the main reason why Exxon Mobil has performed poorly lately.
- With higher oil prices, I expect Exxon Mobil's shares to kick into gear.
- The energy company is still undervalued, and a purchase below $100 can make a lot of sense for long-term oriented investors.
Exxon Mobil Corporation, Currently Undervalued And A Strong Buy
- Exxon Mobil Corp., formed through the merger of Exxon and Mobil in late 1999, is the world's largest publicly owned integrated oil company.
- With a relentless pursuit of efficiency via technology and operational improvement, Exxon sets itself apart from other supermajors and has delivered higher returns on capital.
- On October 31, 2014, the company announced third-quarter 2014 earnings of $1.89 per share, up from $1.79 in the prior year's third quarter.
Dividend Zombies: Exxon - YDP Analysis & Fair Value Appraisal (Part 4)
- Dividend Zombies are income equities that have survived more than 100 years with unbroken and undiminished dividend distributions. These are the 8 income machines that can't be killed.
- This part 4 of an 8-part series, evaluates XOM fair value price, technical momentum trends, entry point, and a yield boost while lowering market risk using covered option writing.
- Exxon, at the November 7th close of $96.59 is 16.63% below fair value price for income investors. A soon expected dividend raise will increase the target to $117.55.
What Can We Learn From Exxon Mobil's Q3 Earnings Release?
- Exxon Mobil reported higher third quarter earnings per share thanks to improvements in downstream operations, lower taxes, asset sales, and a share count reduction.
- The company is working on a record 10 start-ups in 2014, with even more projects on tap in coming years.
- At 12 times earnings, a strong yield and buyback program, and dominance in a field that will always be in demand, Exxon Mobil makes for a fine long-term investment.
Exxon Mobil: Well Positioned In Uncertain Environment, But Valuation High
- XOM is ahead of its peers in mega projects delivery.
- The company also doesn’t plan to trim capex in the current commodity prices environment.
- The company is better positioned in the weak oil prices world but valuation remains high.
- Exxon Mobile is one of the few Dividend Aristocrats to pay a yield above 2.5% and trade at a discount to fair value.
- Recent weakness in energy runs counter to a strong demand outlook and continuing monetary stimulus from the developed world.
- Exxon saw a record number of startups this year and may see production ramp up significantly over the next couple of years.
Exxon Mobil Has Great Defense Against A Tumbling Oil Price
- While the market expected earnings per share (EPS) almost 5% lower than last year due to the tumbling oil price, Exxon achieved 5% EPS growth, thus widely beating analysts' estimates.
- Although most oil majors including Exxon derive about 90% of their earnings from their upstream segment, the difference was made by the downstream segment in Q3.
- The article pinpoints the factors that supported Exxon's earnings and thus determines whether Exxon can repeat such a great performance in an environment of falling oil prices in the future.
- Exxon Mobil reported revenues of $107.5 billion and EPS of $1.89.
- Exxon Mobil distributed $5.9 billion to shareholders in Q3 2014.
- I remain with my original conclusion: Due to its good fundamentals and high shareholder distributions Exxon Mobil is attractive at this price.
- XOM reported Q3 '14 EPS of $1.89, which beat analyst consensus estimate of $1.75.
- The improved results were attributed to higher margins and improved operating results in downstream and chemicals.
- If XOM continues to outperform, I have may to revisit my thesis that CVX is more attractive.
Will Exxon Mobil Top The Whisper Number This Quarter?
- The whisper number is $1.73, in line with the analysts' estimate.
- Exxon has a 51% positive surprise history (having topped the whisper in 24 of the 47 earnings reports for which we have data).
- The overall average post-earnings price move is "negative" (beat the whisper number and see weakness, miss and see weakness) when the company reports earnings.
Exxon Mobil: Dividend Growth Potential And Current Valuation Are Disconnected
- Owing to stable capital spending trend, XOM can comfortably sustain 8%-10% annual dividend growth in the next few years, with both free cash flow and earnings payout level being steady.
- Current valuation implies a dividend growth rate of slightly less than 6%.
- The stock also trades favorably to global comps after factoring in its growth potential and profitability profile.
- ExxonMobil has several problems which need to be corrected in the next few years.
- The company's production levels have been steadily declining since 2009.
- ExxonMobil is not generating enough free cash flow to finance its enormous share buyback program and dividend commitments.
- ExxonMobil has been taking on debt to finance its dividend and share buybacks.
- Many of ExxonMobil's forward growth projects are in Russia, which the company is pulling out of.
- ExxonMobil has increased its dividend payments for 32 consecutive years.
- See the company's competitive advantages and future growth prospects.
- ExxonMobil's yield on cost in 3 years, 5 years, and 10 years is forecast in this article as well.
With Increased US Oil Production, Buy Exxon Mobil On The Pullback
- Growth of crude production in the United States is set to grow; the US has already matched global rival Saudi Arabia in daily output in 2014.
- Already capitalizing on this trend, Exxon Mobil is set to benefit, as horizontal drilling and hydraulic fracturing technologies become more widely used.
- Despite strong earnings results in Q2, Exxon Mobil shares have declined, opening a buying opportunity ahead of Q3 earnings on October 31.
- With a strong outlook and history of beating earnings estimates, we are optimistic on this titan, heading into its next report.
Exxon Mobil: Why You Should Consider This Oil And Gas Champion On The Pullback
- Shares of Exxon Mobil have fallen back to the low $90s as a result of the recent market turbulence.
- Exxon Mobil is a diversified oil and natural gas player with enormous free cash flow strength.
- Exxon Mobil's size and global resource footprint limit downside risk.
- Exxon Mobil might be an interesting investment for investors seeking long-term capital appreciation as well as steady income.
The Rising Marginal Cost Of Oil Production Highlighted By Kashagan Expense Escalation
- Kashagan pipes leaking, will cost an additional $3.6 billion to fix.
- The latest in a series of delays and expense escalations in the $50 billion oil project.
- Highlights issues the oil majors are having ramping up oil production.
- Tangible evidence of the rising marginal cost of production of oil.
Today, 10:45 AM
- Exxon Mobil (XOM -0.8%) and Chevron (CVX -0.4%) are lower as Raymond James downgrades both companies given their limited leverage to potential improving oil prices, while analyst Pavel Molchanov feels oil is within weeks of bottoming regardless of the OPEC decision.
- In cutting shares to Market Perform from Outperform, the firm says XOM's "ultra defensive" characteristics, including a large chemicals and refining businesses, have insulated the company from the worst of the falling oil prices, but it still expects the stock to be a middling performer.
- CVX, which is reduced to Outperform from Strong Buy, is approaching the peak of its spending while production growth should accelerate in the next two years, the firm says.
- Also, Molchanov upgrades Occidental Petroleum (OXY +0.8%) to Strong Buy from Outperform and Hess (HES +0.1%) to Outperform from Market Perform.
Fri, Nov. 21, 5:55 PM
- Four years after the Deepwater Horizon disaster, giant new oil projects are returning to the Gulf of Mexico - bigger and more expensive than ever - even as U.S. oil prices are below $80/bbl at a four-year low.
- New projects alone have the combined capacity to pump ~900K bbl/day: Hess (NYSE:HES) said Monday it had started pumping crude from its deepwater Tubular Bells installation, Exxon (NYSE:XOM) and Anadarko (NYSE:APC) plan to start up two more major Gulf projects in coming months, and Hess, Chevron (NYSE:CVX) and other partners recently OK'd a $6B Gulf development.
- Even BP is returning in a big way, with two Gulf projects and plans to spend $4B/year in the Gulf for the next decade, as it works on technology to drill at greater depths.
- All this is happening even as costs are jumping, partly because companies are drilling farther from shore and in deeper waters; deepwater wells are up to 25% more expensive today than in 2010, and drilling the average deepwater Gulf well takes 13% longer than it did before the 2010 spill.
- Shell’s (RDS.A, RDS.B) 100K bbl/day Olympus, which came online ahead of schedule and under budget, began tapping oil and gas in the Gulf in February; it is also working on a new Gulf project that will tap an oil field under 9,500 feet of water, 3x deeper than Olympus.
Fri, Nov. 21, 8:49 AM
- Ivory Coast's government says it is finalizing production sharing agreements with Exxon Mobil (NYSE:XOM) for two ultra-deepwater blocks in the Gulf of Guinea, and expects to finish discussions by year's end.
- The west African country is seeking investors for seven new ultra-deepwater blocks, inviting XOM and other oil majors to a promotional event in Texas last month.
Thu, Nov. 20, 5:58 PM
- It’s time for the medium-term investor to start buying the biggest of big oil companies, HSBC says, as the market seems to have capitulated on the sector.
- HSBC views BP and Total (NYSE:TOT) as clearly the cheapest of the oil supermajors, with share price discounts to sum-of-the-parts valuation for BG Group (OTCPK:BRGXF, OTCQX:BRGYY), Statoil (NYSE:STO) and Repsol (OTCQX:REPYY, OTCPK:REPYF); Exxon Mobil (NYSE:XOM) still trades at small premium to the SoP valuation, and the firm likes Chevron (NYSE:CVX), which was penalized in its valuation by its ongoing capital intensity in 2017.
- The stocks also offer average prospective dividend yields of 5%-plus for 2015, and the dividends look robust as they are supported by strong balance sheets, more active asset disposal programs, and strong new project cash margins.
Thu, Nov. 13, 7:23 PM
- North Dakota regulators today proposed standards for requiring energy companies to treat the crude they pump from the Bakken Shale to make it less volatile before shipment by pipeline or train.
- "Our crude oil leaving North Dakota will behave like the gasoline you put in your car," says the head of the state's Department of Mineral Resources, which came up with the recommendations.
- The new rules would require every barrel of oil produced in the state to undergo some kind of treatment, with the goal that all oil-producing Bakken Shale wells ship crude with a vapor pressure below 13.7 psi, similar to 13.5 psi for most automobile gasoline.
- Top Bakken producers: CLR, EOG, KOG, WLL, HES, XOM, OAS, NOG, EOX, MRO.
Thu, Nov. 13, 3:20 PM
- U.S. crude oil prices break below $75/bbl for the first time in more than three years, brushing aside an IEA report showing a surprise 1.735M barrel inventory drawdown as well as remarks by the Saudi oil minister dismissing talk of an oil price war among producers.
- West Texas crude settled today at $74.21/bbl, -3.9% and breaking below an important support level; during the past three years, futures have tested but not broken through that level three times.
- Brent crude recently was trading below $78, -3%.
- Global oil majors are all lower: COP -1.9%, BP -1.4%, CVX -1.4%, XOM -1.1%, TOT -0.9%, RDS.A -0.7%.
- Oil services companies and offshore drillers suffer even sharper drops: SDRL -4.4%, SLB -4.2%, HAL -3.9%, BHI -3.9%, RIG -3.8%, DO -3.5%, NBL -2.9%.
- ETFs: USO, XLE, OIL, UCO, ERX, VDE, OIH, SCO, XOP, ERY, DIG, BNO, UGA, DTO, DBO, DUG, XES, IYE, IEO, CRUD, IXC, IEZ, PXE, USL, UWTI, IPW, FENY, PXJ, UHN, DWTI, DNO, RYE, FXN, SZO, GNAT, OLO, DDG, FILL, OLEM, TWTI
Thu, Nov. 13, 11:59 AM
- Regulators set to decide on rules for shipping crude oil via railroad are relying on testing methods that may understate the explosive risk of North Dakota crude, according to a WSJ report citing industry and Canadian officials.
- The testing controversy centers on how to determine vapor pressure, a measure of how quickly a liquid fuel evaporates and emits gases; the industry has long relied on a decades-old methodology that does not require sealed or pressurized containers to collect or test crude samples.
- The North Dakota Industrial Commission is set to rule on what steps, if any, producers must take to strip volatile gases out of crude oil before loading it into railroad tank cars.
- Top Bakken producers include CLR, EOG, KOG, WLL, HES, XOM, OAS, NOG, EOX, MRO.
Mon, Nov. 3, 11:52 AM
- Exxon Mobil (NYSE:XOM), Shell (RDS.A, RDS.B), Chevron (NYSE:CVX) and BP have lower profit margins than a decade ago, according to an analysis in a page one WSJ story, as the big oil stalwarts are shelving expansion plans and shedding operations.
- Combined, the four companies averaged a 26% profit margin on their oil and gas sales in the past 12 months vs. 35% a decade ago, according to the analysis.
- Shell said last week that its oil and gas production was lower than it was a decade ago and is likely to keep falling for the next two years; Exxon's output sank to a five-year low after the company disposed of less-profitable barrels in the Middle East.
- The companies’ sheer size has meant that only huge, complex and expensive projects are big enough to make a difference to the companies’ reserves and revenues; with oil prices now heading lower, such problems only look as though they’re going to get worse.
Fri, Oct. 31, 5:56 PM
- United Steelworkers leaders, representing employees at two-thirds of U.S. refineries, are "looking for a fight" as they prepare to negotiate the next three-year contract with refiners, says the USW international VP who manages the union’s oil sector.
- The USW is seeking a substantial increase in wages, stronger rules to prevent fatigue and measures to preserve the share of union workers rather than contract employees.
- During the last round in 2012, USW and Shell (RDS.A, RDS.B), which represented refiners, spent about a month in negotiations before agreeing to a national contract which was used as the foundation for forging refinery-by-refinery contracts with union locals.
- An S&P index of refiners - including Exxon (NYSE:XOM), Chevron (NYSE:CVX), Marathon Petroleum (NYSE:MPC) and Tesoro (NYSE:TSO) - has more than doubled since the beginning of 2012, and the unions want a piece of the pie.
Fri, Oct. 31, 5:37 PM
- The cheapest crude oil in more than two years has the world’s two top oil producers, Exxon Mobil (NYSE:XOM) and Chevron (NYSE:CVX), glad they held onto their refineries when rivals were shunning the business.
- Both companies reported better than expected Q3 earnings today (I, II), with executives touting the importance of owning massive refineries alongside oil and gas wells, "demonstrat(ing) the strength of our integrated business model," as XOM CEO Rex Tillerson says.
- XOM’s Q3 profit from refining jumped, helping drive a 2.5% Y/Y increase in its total profit, while CVX’s refinery earnings more than tripled, propelling a 13% jump in overall profit; XOM said it sold U.S. oil for $89.60/bbl on average, down 12% Y/Y, while international barrels fetched $96.76, or 9.3% less, and CVX said its U.S. price fell $10/bbl to $87 as international prices fell $93 from $104.
- But sustaining profits could be more of a challenge if demand for fuels continues to weaken around the world, which could limit output and profit gains at refining operations; also, refining profit margins already are shrinking as gasoline and diesel prices are dragged lower by the crude from which they’re derived.
Fri, Oct. 31, 8:58 AM
- Exxon Mobil (NYSE:XOM) +0.9% premarket after reporting better than expected Q3 earnings as strong refining performance offset falling oil prices and production.
- Earnings in XOM’s E&P business fell 4.4% Y/Y to $6.42B, hurt by lower production, but refining and marketing earnings jumped 73% to $1.02B, helped by higher refining margins and volume; the chemicals unit posted a $1.2B profit, up 17%.
- Oil and gas production fell 4.7% Y/Y - excluding the impact of the expiry of the Abu Dhabi onshore concession, production fell 1% - but XOM says it remains on track for full-year output of 4M boe/day.
- Q3 capex fell 6.8% to $9.84B, while share repurchases totaled $3B.
Fri, Oct. 31, 8:39 AM
- Canadian Oil Sands (OTCQX:COSWF) reports Q3 net profit fell 65% Y/Y to C$0.18/share, citing lower revenue and foreign exchange-related losses.
- Q3 sales volume rose to 87,787 bbl/day, up4% Y/Y, but average crude prices fell to C$102.58/bbl from C$112.55 a year earlier, and operating expenses rose to to C$47.73/bbl, up from $46.15.
- Cuts its annual maximum output target to 100M barrels of oil, down from a previous 104M barrels and an initial forecast of up to 110M barrels.
- Canadian Oil Sands owns a 37% stake in its main operating asset, Syncrude, with six other companies owning the remainder, including lead operator Exxon Mobil (NYSE:XOM) unit Imperial Oil (NYSEMKT:IMO) and Suncor Energy (NYSE:SU).
Fri, Oct. 31, 8:30 AM
Thu, Oct. 30, 6:27 PM
- YPF rose 2.5% today as Argentina lawmakers voted to approve a law revamping regulations on energy investment, which could help the country boost its oil and gas production over the next two decades.
- The package of new laws cuts the minimum investment needed for companies to be exempt from import controls to $250M from $1B.
- Argentina offers considerable energy potential, ranking no. 3 in the world in shale gas reserves and no. 4 in shale oil, yet its refining capacity is limited and it imports energy products.
- Oil majors Total (NYSE:TOT) and Chevron (NYSE:CVX) have invested in Argentina, and Exxon (NYSE:XOM) has talked with YPF about energy exploration opportunities in the country.
Thu, Oct. 30, 5:30 PM
Wed, Oct. 29, 1:55 PM
XOM vs. ETF Alternatives
Exxon Mobil Corporation is engaged in energy, involving exploration for, and production of, crude oil and natural gas, manufacture of petroleum products and transportation and sale of crude oil, natural gas and petroleum products.
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