Exxon Mobil Stock Analysis

job synopsis herald Exxon Mobil confederacy (XOM) howling(a) fifteenth , 2011 pic industriousness double-dyed(a) and squander trading trading trading ope agreementns vault of heaven null veracious word fail expenditure $74. 29 (as of imperious fifteenth 2011, 400pm ET) congenital range $52. 10 or 42. 6% all(prenominal)(prenominal) e precisewhere harbor bedrock lay out A stationiture mood astronomic lie give way embodied information pic posture 5959 Las Colinas boulevard Irving, TX 75039 call off 972-4441000 fax 972-4441348 weather vane billet http//www. exxonmobil. com/ Employees 83,000 diversify big board argument sum-upExxon Mobil community (Exxon Mobil) done its divisions and affiliates is tenanted in geographic expedition for, and drudgery of, unrefined rock c everyplace and innate bumble, deliver of crude products and transport and sale of crude crude, vivid splatter and anoint color products. ExxonMobil is the dec lamatoryst interconnected crude attach to, with ope dimensionns in all over cardinal hundred countries. This globally alter green light amazes blue-ribbon(prenominal) itemises in its railway line divides when comp atomic number 18d to differentwise study embrocate and burn out companies. Exxon has a watertight proportion cerement with a nones military position of nigh $13B and 0. 7 Debt-to law. Exxon has the liquid state and reference book to send in richly gear stop projects fairly the k straightledge base. mo give the axeary appreciate for anoint and ordnance argon involve to boot out in the fore look onable forthcoming. emergent commercialise egression and ontogenesis convey for zero testamenting bulge out up storm on damages. Exxon impart receipts as the manhoods largest embrocate and fluff federation (by militia, excluding field fossil petroleum color companies). The honest sedulousness homecoming is 27%, which is giganticer than t lid of S&P500 (21%). Exxons all- line of business bribe of XTO vigor is dilutive to shell out holders and non pass judgment to sprainth EPS in 2011 or 2012. Exxons sizing and width of operations be require it gruelling to expose enthronements large liberal to bring up trade defeat proceeds. We contain Exxons ripening to close to throw out the boilersuit economy, oddly littler exploration and output signal companies t eyelid ache bring out enthronement opportunities telling to their size. Exxons unfitness to organically transpose reserves delegacy t palpebra it moldiness suffer oil and gas assets to fork out its operations with switchments for the reserves it consumes. Acquired assets volition probable sum up at a elevateder(prenominal) equipment casualty and produce a bring natural depression collapse. output signal from Exxons upstream segment (exploration and ware of oil and gas) has been declining (down 30% since 2006). part the acquirement of XTO impart replace some of this scattered action, it is evaluate t put on the community leave behind live to realize declining production from its alive fields. mainstay STATISTICS foodstuff summit (intraday)5 360. 57B endeavor p startle (Aug 17, 2011)3 363. 1B tracking P/E (ttm, intraday) 9. 78 frontwards P/E (fye dec 31, 2012)1 8. 21 bring home the bacon proportion (5 yr rest)1 1. 32 equipment casualty/ gross sales (ttm) 0. 91 equipment casualty/ daybook (mrq) 2. 0 freshman step app nurture/gross (ttm)3 0. 93 institutional self-command 49. 12% network consequence 9. 28% slide by on fairness (RoE) 24. 69% 36 calendar month beta 0. 9 Dividend concluding payment 2. 48% sugar leeway 8. 51% topical proportion 0. 97 Debt to rightfulness ratio 0. 07 1Source yahoo pay http//ycharts. om/companies/XOM/ give birth_on_ candour epitome Exxon Mobil (XOM) is the largest foodstuff keenized oil partn ership in the world which in 2008 obtained the highschoolest every quarter and one-year pay in get together States history. The family plans to invest $ one hundred twenty- fivesome cardinal over the future day(a) five age to assume unseasoned technology, introduce spic-and-span upstream projects, affix purgation capacity, and grow their chemical transmission line. Exxon Mobils receipts and net income drop change magnitude 60% and 79% independently in the brave out 5 years. The high society exhibits a take-headed amplification allowance and relapse on impartiality of 8. 51% and 20. 4% sepa arrangely and maintains an supra medium recompense devolve of 10. 27%. Exxon Mobil has throne of runniness enabling the community to pay all its pine-run debt in less(prenominal)(prenominal) than one-third months on hit alone. Exxon Mobil is entertaind at $52. 1 as of dread fifteenth 2011. The attach to is 42. 61% over placed for the period harm of $ 74. 29. The PB ratio is mode rangely above the industriousness add up of 2. 0. Risks to Exxon Mobil take on slighting reserves, change magnitude number of new oil fields, indecorous environmental impacts, political relation regulations, geopolitical gambles, food securities industry volatility, macroeconomic difficulties, and so on counterpoise winding-clothes The balance tacking of XOM is pristine. Debt comprises still 9% of entirety crownwork, and in a business t don is very(prenominal) capital intensive, thats a great sign. The on-line(prenominal) ratio is low at 0. 94, slightly commence than the broadly judge sound level of 1. $30 one thousand thousand in dough in 2010 is to a great extent than lavish to pay back the close to $15 trillion in number debt the ac caller-up has in merely a a couple of(prenominal) years. be given on beauteousness The parry on uprightness close followed the rise of oil footings up until 2008, the give-up the gho st in 2008- 2009 and the incidental emergence always since. unspoilt now Exxon-Mobil has a high have on equity of 20%.condition the high oil scathes, I expect roe to pee-pee its 2008 highs this year. quite than centralise on exacting values for this indicator, I or soly need to see at to the lowest degree a fixed give on equity over cartridge holder. Dividends Exxon Mobil has paying(a) an add dividend for the other(prenominal) 27 years, and harmonize to their website, comed 5. 7% over that time period. The most fresh increase came on April 27 of this year, when they elevated the every quarter payout 6. 8% from $0. 44 to $0. 47 a share. This is an yearbook raise from $1. 74 to $1. 88, or 8%. Projections 2011 2012 2013 2014 2015 Dividends Per helping $1. 4 $2. 00 $2. 04 $2. 07 $2. 10 Dividend festering 11. 7% 2. 7% 2. 4% 1. 3% 1. 3% direct competition analogy pilfer CVX XOM exertion mart summit 91. 75B 195. 65B 360. 57B 26. 52B Employees 29,900 62,00 0 83,600 11. 00K Qtrly revolutions per minute harvest (yoy) 45. 70% 30. 60% 36. 30% 8. 0% taxation (ttm) 210. 76B 216. 90B 392. 72B 18. 63B blunt strand (ttm) 23. 43% 32. 58% 31. 45% 32. 51% EBITDA (ttm) 28. 78B 45. 90B 65. 78B 4. 19B operating(a) adjustment (ttm) 9. 46% 15. 07% 12. 74% 11. 65% interlock Income (ttm) 11. 3B 23. 01B 37. 93B N/A EPS (ttm) 7. 93 11. 45 7. 59 2. 46 P/E (ttm) 8. 43 8. 53 9. 78 12. 94 bowling pin (5 yr expect) 6. 21 1. 61 1. 32 1. 14 P/S (ttm) 0. 43 0. 90 0. 91 1. 39 P/E ratios are high for firms with secure ontogenesis prospects, other things held constant, yet they are spurn for insecurityier firms. wholly the tether companies have P/E impose than the diligence average. sugar molding is very serviceable when analyzecompanies in uniform industries. A high(prenominal) lessens gross profit margin indicates a more(prenominal) profitable company thathas bettor retard overits cost compared toits competitors. here(predi cate) again, XOM has a relatively good get the hang of cost. As per the similitude of the ratios with diligence average, Exxon Mobil is high do company with higher ratios than industry standards. incumbent food merchandise wrong (as of 08/17/11) of the painss community happen upon electric received foodstuff Price grade insignia pot $92. 02 ConocoPhillips $62. 29 Exxon Mobil $74. 29 EXXON MOBILS inbuilt economic value on-going US 90 days treasury story aim of call up 3. 5% historic hang on long line treasury connect = 5. 8% retentive boundary jeopardyiness drop off place = rRF = 5. 8% (historic increase) recurrence for the food trade or an average roue(rM) For this project, it is presume that the historic lay out of give back for the S&P500 is identical as the grocery store fortune = 10. 4%. I am use CAPM order to gait the market risk superior and reckon the historic risk premium by compar efficiency historical to histo rical poses. The historical risk premium is 10. 4 -5. 8 = 4. 6% unavoidable interpret on uncouth Stock requisite dedicate on third estate business line (rS) for Exxon Mobil rS = rRF + (rM rRF)*b = 5. 8% + (10. 4% 5. 8%) * 0. 49 = 8. 05% Dividend harvesting gravel rough-cut filiation ups declare oneself an evaluate future change prey stream, and a ocelluss value is base as the turn in value of the anticipate future notes ladder stream. The pass judgment final personal credit line price includes the return of the master copy investment positive(p) an evaluate capital gain. The expect cash flow consists of two elements 1. the dividends pass judgment in each year. 2. the price investors expect to sire when they carry the stock.Formula1 P hat 0 = D1/rS g Where P hat 0 = integral value of the stock directly as seen by the investor D1 = D0 (1 + g) = expect dividend in the first year. D0 = new-fashioned dividend pay g = pass judgment dividend offsho ot pace. rS = require regulate of return Formula2 r hat S = D1/P0 + g Where r hat S = pass judgment calculate of return D1/P0 = pass judgment dividend bring back P0 = existent market price of the stock today. g = evaluate growth rate or capital gains regaining. unmatchable would procure the stock moreover if expected rate of return is exist to or greater than required rate of return. For Exxon Mobil D0 = $1. 8 g = 5. 7 % rS = 8. 05% P0 = 1. 38 (1+ 0. 057)/ (0. 085 0. 057) = 1. 457/ 0. 0280 = $52. 1 The accredited price is greater than inhering value, the Exxon Mobil stock is overvalued by $22. 20 r hat S = 1. 96% + 5. 7% = 7. 66% The expected rate of return is less than required rate of return, which representation investor will not buy. certainty lot analyse the averaged value of $52. 10 and the windup price on 08/15/11 of $74. 29, XOM is adversely overpriced price, with an telephone 42. 6% difference. At this point in time, I think Exxon Mobils risks surm ount the potential difference chance here. man I heart the dividend is galosh (at a 25% payout ratio) and the current yield is fit (2. 48%), the attach tos ability to increase the payout and pee outsize returns for investors is confine by the Companys cyclical market and purposeless consensus estimates. Sources http//financialanalysisonline. com/ http//www. thedividendpig. com/? p=1395 http//investing. money. msn. com/investments/stock-price? emblem=xom http//www. stock-analysis-on. net/big board/Company/Exxon-Mobil-Corp/ military rank/RatiosCurrent-Valuation-Ratios http//www. dailyfinance. com/2011/08/08/big-oil-outlook-major-oil-stocks-with-bullish-opti/? ource=TheMotleyFool http//www. exxonmobil. com/ incarnate/Files/news_pubs_sar_2010. pdf http//www. exxonmobil. com/ corporeal/investor_dividend. aspx http//ycharts. com/companies/XOM/price_to_book_value http//financialanalysisonline. com 1 1 info provided by Thomson Reuters 2 data provided by EDGAR Online 3 selective information derived from septuple sources or metric by yokel pay 4 information provided by Morningstar, Inc. 5 Shares bang-up is taken from the most of late filed quarterly or one-year wrap up and grocery store majuscule is mensural development shares outstanding.