Industry: Oil and Gas Operations
Price: $74.29 (as of August 15th 2011, 4:00pm ET)
Intrinsic Value: $52.10 or 42.6% overvalued
Fundamentals Grade: A
Investment Style: Large Cap Blend
Location: 5959 Las Colinas Boulevard
Irving, TX 75039
Web Site: http://www.exxonmobil.com/
Exxon Mobil Corporation (Exxon Mobil) through its divisions and affiliates is engaged in 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.
• ExxonMobil is the largest integrated oil company, with operations in over 200 countries. This globally diversified enterprise produces superior returns in its business segments when compared to other major oil and gas companies. • Exxon has a strong balance sheet with a cash position of approximately $13B and 0.07 Debt-to equity. Exxon has the liquidity and credit to invest in high return projects around the world. • Prices for oil and gas are expected to rise in the foreseeable future. Emerging market growth and increasing need for energy will place upward pressure on prices. Exxon will benefit as the world’s largest oil and gas company (by reserves, excluding national oil companies). The average industry return is 27%, which is greater than that of S&P500 (21%). • Exxon’s all-stock purchase of XTO Energy is dilutive to share holders and not expected to increase EPS in 2011 or 2012. • Exxon’s size and breadth of operations make it difficult to find investments large enough to produce market beating growth. We expect Exxon’s growth to slightly lag the overall economy, especially smaller exploration and production companies that have better investment opportunities relative to their size. • Exxon’s inability to organically replace reserves means that it must acquire oil and gas assets to supply its operations with replacements for the reserves it consumes. Acquired assets will likely come at a higher price and produce a lower return.
• Production from Exxon’s Upstream segment (exploration and production of oil and gas) has been declining (down 30% since 2006). While the acquisition of XTO will replace some of this lost production, it is expected that the company will continue to experience declining production from its existing fields.
|Market Cap (intraday)5: |360.57B | |Enterprise Value (Aug 17, 2011)3: |363.81B | |Trailing P/E (ttm, intraday): |9.78 | |Forward P/E (fye Dec 31, 2012)1: |8.21 | |PEG Ratio (5 yr expected)1: |1.32 | |Price/Sales (ttm): |0.91 | |Price/Book (mrq): |2.30 | |Enterprise Value/Revenue (ttm)3: |0.93 | |Institutional Ownership |49.12% | |Earnings Yield |9.28% | |Return on equity (RoE) |24.69% |...