Exonmobil Investment Recommendation Paperr
Investment Analysis and Recommendation Paper
Executive Summary
Current largest publicly traded company with 390.47 billion USD market’s value, ExxonMobil is a leading global oil and gas firm. It possesses a corporate governance strategy that ensures the recruitment of a competent board of trustees and executive managers as well as the avoidance of unnecessary risk taking. Financial analyses reveal a financial strong and healthy firm with the best asset management and profitability ratios in the oil and gas industry (10.82% for the return on asset and 28.69% for the return on equity) and this with the lowest financial leverage ratio of 6.75%. With such low debt to equity ratio, its probability of financial distress is estimated to be 1%. The firm capital structure follows the pecking-order theory and despite significant retained earnings, ExxonMobil is among the best dividend paying companies.
While consistent improved financial performance, extensive research and development activities, geographical diversification, integrated refining and chemical operations and industry leading position constitute the main strength of the firm, several pending litigations can impede the development of its business. However, if ExxonMobil takes the appropriate measures to mitigate environmental and regulatory issues such as water contamination and stricter regulation for deep offshore drilling, the company has a promising future with its extensive proved undeveloped reserves, the unconventional assets expansion and the upcoming LNG projects.
We recommend therefore investing in ExxonMobil stocks.
Introduction
ExxonMobil is an American multinational and integrated global oil and gas company headquartered in Texas, United States. ExxonMobil operates through three reportable business segments: Upstream, Downstream and Chemical. The company’s principal business is energy, involving exploration and production of crude oil and natural gas, refining, manufacture of
Executive Summary
Current largest publicly traded company with 390.47 billion USD market’s value, ExxonMobil is a leading global oil and gas firm. It possesses a corporate governance strategy that ensures the recruitment of a competent board of trustees and executive managers as well as the avoidance of unnecessary risk taking. Financial analyses reveal a financial strong and healthy firm with the best asset management and profitability ratios in the oil and gas industry (10.82% for the return on asset and 28.69% for the return on equity) and this with the lowest financial leverage ratio of 6.75%. With such low debt to equity ratio, its probability of financial distress is estimated to be 1%. The firm capital structure follows the pecking-order theory and despite significant retained earnings, ExxonMobil is among the best dividend paying companies.
While consistent improved financial performance, extensive research and development activities, geographical diversification, integrated refining and chemical operations and industry leading position constitute the main strength of the firm, several pending litigations can impede the development of its business. However, if ExxonMobil takes the appropriate measures to mitigate environmental and regulatory issues such as water contamination and stricter regulation for deep offshore drilling, the company has a promising future with its extensive proved undeveloped reserves, the unconventional assets expansion and the upcoming LNG projects.
We recommend therefore investing in ExxonMobil stocks.
Introduction
ExxonMobil is an American multinational and integrated global oil and gas company headquartered in Texas, United States. ExxonMobil operates through three reportable business segments: Upstream, Downstream and Chemical. The company’s principal business is energy, involving exploration and production of crude oil and natural gas, refining, manufacture of
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