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Here's The Thing About Exxon Mobil

Aug. 07, 2018 12:32 PM ETExxon Mobil Corporation (XOM)10 Comments


  • XOM recently reported earnings and the Street has not been buying on the news.
  • Huge capital expenditures led to lower earnings but XOM still is compelling for a long-term entry point, especially any time it is under the $80-mark.
  • Investors need to watch segment-specific performance going forward. Based on year-to-date performance we have revised our 2018 expectations.
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Exxon Mobil (NYSE:NYSE:XOM) recently reported earnings and the Street did not find much to like and has been selling on the news. We like to look at the name from a long-term perspective, and that means that we must have a solid grasp on the fundamentals of the name, especially since this is the one blue-chip we use as a measure for the health of the oil sector.

Here is the deal. We believe that XOM still is compelling for a long-term entry point any time it is under the $80 mark. The stock is there right now and has been offering this entry point a few times in recent weeks. At $70 oil, we still see a potential opportunity to get long the stock, but we need to keep an eye on the fundamentals. It is not just the top and bottom line which we need to watch either, but also the expenses of the company and the segment specific performance matters. In this column, we will discuss trends in several of the critical metrics you should watch for, in addition to updating our 2018 expectations.

Top-line growth strong

We all know that oil and gas are what drives revenue for the company. As such, the higher the commodity price, the more money that can be made. With that said, revenues have returned to growth over the last year plus thanks to solid energy prices. With the rise in oil and gas prices, there has been a direct correlation with increased revenues for the company. When examining trends in the top line over the last several second quarters, we see the rebound in the top line as oil prices began to rebound from 2016:

Source: SEC filings, graphics by BAD BEAT Investing

The trend is clearly positive here. Revenues were

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Analyst’s Disclosure: I am/we are long XOM. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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