Is Exxon Stock A Good Investment? – (XOM)

Is Exxon Mobil a good way to diversify your portfolio?


Exxon Mobil is regarded as one of the largest energy companies internationally. With a market cap of nearly 360 billion, Exxon focuses its main business on oil production.  Just for scale, Exxon Mobil generated over $237 billion in annual revenue. Based in Irving, Texas, Exxon operates globally in both upstream and downstream markets.

Exxon’s operation in upstream markets means that the company carried out exploration and production. Downstream operations includes refinery. The company has three main businesses, upstream, downstream and chemical operations.

Exxon Future Growth

Exxon Mobil Future
Exxon Mobil Future

By looking at its recent ventures, its clear to see that Exxon Mobil’s investments bring back a great return. When compared to rivals like Royal Dutch Shell, Exxon comes out on top when looking at ROI.

The future of Exxon Mobil involves a variety of energy forms. The recent Paris Agreement’ means that Exxon is being more cautious about the risks of climate change.

As energy supply demand increases, Exxon are looking to diversify their sources. The company will be utilizing America’s shale regions to obtain natural gas and oil. Not forgetting deepwater fields near Brazil and new nuclear reactors in China. Finally, Exxon intends to build more wind turbines across the world.

In the next 30 months, Exxon will be diversifying their energy sources even further than the ones mentioned above. Renewable energy sources such as wind and solar will be more popular with Exxon as society demands lower-emission energy sources. Renewable energy is likely to be cheaper than mining oil for Exxon, meaning better margins. These better margins are likely to increase the Exxon stock price and ensure the share-price is more stable.

Exxon Stock Prediction

When looking at price performance, Exxon Mobil stock had an eventful year. The company’s shared reached a 1-year high, at $89.30 on 01/29/18/. The lowest price that Exxon Mobil stock reached this last year was $72.15.

I forecast the Exxon stock to reach highs of $115 in the next 12 months, with lows of $70 during the same time frame.

I currently give Exxon Mobil stock a “HOLD” rating.

Exxon Mobil Revenue

The “Upstream” business makes up most of Exxon’s earnings. Exxon’s upstream business includes exploration of new oil reserves and the production of crude oil / natural gas.

Exxon Mobil Profits

The commodity market, natural gas and crude oil index price dictates Exxon’s profits. The price of these markets fluctuate over time, causing the Exxon stock price to be of high risk for some investors

Exxon requires billions of dollars worth of capital to continue developing its assets in the oil exploration and extraction market. This high intensity capital requirements mean that free cash flow metrics are often reported inaccurately for the company.

Exxon Stock Dividends

The price of oil has fluctuated massively in the past decade or so, meaning that Exxon’s profits have also fluctuated. Even with this high volatility for the company’s bottom line, Exxon stock dividend has grown consistently.  Because Exxon has so many assets, it can fall on its balance sheet when profits are low.

Exxon stock dividend has increased for 36 years straight, it is a quarterly dividend. With an annual sum paid to shareholders of $3.28 per share. The current Exxon dividend yields 3.96% on its stock price. This consistent dividend payout makes the company stock enticing for investors who are looking for an income from their investments.

Although, in recent years, the Exxon stock dividend has been funded by debt and sold asset funds. Free cash flow also goes into the dividend fund.

One month ago, 2 analysts said that Exxon stock is a BUY, 4 analysts gave Exxon stock an “OUTPERFORM” rating. 10 analysts gave Exxon stock a “HOLD” rating, 1 rated the stock “SELL”.