What Should You Know About Exxon Mobil (XOM)?

Exxon Mobil shares fell by -1.7% during the day's morning session, and are now trading at a price of $103.36. Is it time to buy the dip? To better answer that question, it's essential to check if the market is valuing the company's shares fairly in terms of its earnings and equity levels.

A Very Low P/E Ratio but Trades Above Its Graham Number:

Exxon Mobil Corporation engages in the exploration and production of crude oil and natural gas in the United States and internationally. The company belongs to the Energy sector, which has an average price to earnings (P/E) ratio of 7.54 and an average price to book (P/B) ratio of 1.68. In contrast, Exxon Mobil has a trailing 12 month P/E ratio of 7.0 and a P/B ratio of 2.1.

When we divide Exxon Mobil's P/E ratio by its expected EPS growth rate of the next five years, we obtain its PEG ratio of -0.99. Since it's negative, the company has negative growth expectations, and most investors will probably avoid the stock unless it has an exceptionally low P/E and P/B ratio.

Low Leverage Levels and Exceptional EPS Growth:

2019-12-31 2020-12-31 2021-12-31 2022-12-31
Revenue (MM) $264,938 $181,502 $285,640 $398,675
Gross Margins 21.1% 4.5% 22.7% 25.8%
Operating Margins 100.0% -15.9% 10.9% 15.9%
Net Margins 5.41% -12.36% 8.07% 13.98%
Net Income (MM) $14,340 -$22,440 $23,040 $55,740
Net Interest Expense (MM) -830 -1,158 -947 -798
Net Interest Expense (MM) -$830 -$1,158 -$947 -$798
Depreciation & Amort. (MM) -$18,998 -$46,009 -$20,607 -$24,040
Earnings Per Share $3.36 -$5.25 $5.39 $14.77
EPS Growth n/a -256.25% 202.67% 174.03%
Diluted Shares (MM) 4,270 4,274 4,275 4,043
Free Cash Flow (MM) $5,355 -$2,614 $36,053 $58,390
Capital Expenditures (MM) -$24,361 -$17,282 -$12,076 -$18,407
Net Current Assets (MM) -$113,607 -$123,727 -$104,086 -$68,963
Current Ratio 0.78 0.8 1.04 1.41
Long Term Debt (MM) $24,672 $45,502 $41,667 $40,559
Net Debt / EBITDA 1.07 3.23 0.75 0.11

Exxon Mobil has exceptional EPS growth and low leverage. Additionally, the company's financial statements display growing revenues and decreasing reinvestment in the business and generally positive cash flows. However, the firm suffers from slimmer gross margins than its peers and weak operating margins with a negative growth trend. Finally, we note that Exxon Mobil has just enough current assets to cover current liabilities.

The above analysis is intended for educational purposes only and was performed on the basis of publicly available data. It is not to be construed as a recommendation to buy or sell any security. Any buy, sell, or other recommendations mentioned in the article are direct quotations of consensus recommendations from the analysts covering the stock, and do not represent the opinions of Market Inference or its writers. Past performance, accounting data, and inferences about market position and corporate valuation are not reliable indicators of future price movements. Market Inference does not provide financial advice. Investors should conduct their own review and analysis of any company of interest before making an investment decision.