Latest news with #XOM
Yahoo
an hour ago
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This Oil Supermajor is Known for its High Shareholder Returns
Exxon Mobil Corporation (NYSE:XOM) is included among the 12 Best Oil and Gas Dividend Stocks to Buy Now. Aerial view of a major oil rig in the middle of the sea, pumping crude oil. Known for its high payouts to shareholders, Exxon Mobil Corporation (NYSE:XOM) has distributed more than $125 billion in dividends and buybacks over the last five years. The oil and gas behemoth boasted cash payouts of $9.1 billion only in the first quarter of 2025, including $4.8 billion of share buybacks. Exxon Mobil Corporation (NYSE:XOM) keeps a steady track record of generating strong cash flows and has raised its payouts for 42 years in a row, putting it among the 11 Best Dividend Aristocrats to Invest in Now. To maintain such heavy payouts, Exxon Mobil Corporation (NYSE:XOM) has grown its earnings at an annual rate of roughly 30% over the last five years, with its cash flow also rising at a CAGR of roughly 15% during the period. More impressively, the oil behemoth continues to advance at full steam, with aims to add a further $20 billion in earnings and $30 billion in cash flow by the end of the decade. Exxon Mobil Corporation (NYSE:XOM) is one of the largest integrated fuels, lubricants, and chemical companies in the world. The company operates facilities and markets products around the globe and explores for oil and natural gas on six continents. While we acknowledge the potential of XOM as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock. READ NEXT: 10 Best Nuclear Energy Stocks to Buy Right Now and The 5 Energy Stocks Billionaires are Quietly Piling Into. Disclosure: None. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
3 days ago
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ExxonMobil Gains a Marginal 1.6% in a Year: Hold or Fold the Stock?
Exxon Mobil Corporation XOM has gained 1.6% over the past year, outpacing the 0.7% decline of the composite stocks belonging to the industry. This signifies that there is not much momentum in the stock price, but before coming to investment conclusions, investors should examine XOM's fundamentals and overall business environment. One-Year Price Chart Image Source: Zacks Investment Research Softness Prevails in ExxonMobil's Upstream Business Per the latest short-term energy outlook of the U.S. Energy Information Administration ('EIA'), the West Texas Intermediate Spot Average price for 2025 is projected at $65.22 per barrel, significantly lower than $76.60 per barrel in 2024. EIA further lowers the projections for the commodity's price for 2026 to $54.82 per barrel. Since analysts expect oil supply to grow faster than the demand for it, global oil inventories are rising, putting pressure on crude prices, which could hurt XOM's upstream operations. Since ExxonMobil generates the king-size of its earnings from its upstream operations, lower crude prices are likely to hurt its bottom line. Other integrated majors that are also getting the brunt of lower oil prices are Chevron Corporation CVX and BP plc BP. This is because both CVX and BP generate significant proportions of their earnings from exploration and production activities of oil and natural gas. Many analysts think that commodity price volatility, especially when crude prices are likely to fall in the days ahead, could limit cash flows of CVX and BP like XOM, and hence require cautious capital allocation. Will XOM's Bottom Line Be Affected in Q2 Earnings? ExxonMobil recently disclosed in an 8-K filing that it expects earnings for the second quarter of 2025 to be hurt sequentially by lower oil and natural gas prices. With exploration and production activities contributing mostly to XOM's bottom line, a weaker commodity pricing environment in the June quarter of this year is a concern. According to EIA, the average spot prices for Cushing, OK, West Texas Intermediate (WTI) crude for April, May and June were $63.54, $62.17 and $68.17 per barrel, respectively. Based on the EIA data, the pricing environment was healthier in the first quarter, with average prices of $75.74, $71.53 and $68.24 per barrel for January, February and March, respectively. The same story also applies to natural gas prices. Softer commodity prices are expected to hurt XOM's upstream business, as the energy giant forecasts that lower oil prices will sequentially decrease its upstream earnings by $800 million to $1.2 billion. A change in gas prices will reduce its upstream profit by $300 million to $700 million. Thus, it can be assumed that ExxonMobil's second-quarter results are going to take a hit. The Zacks Consensus Estimate for XOM's earnings for the June quarter is pegged at $1.46 per share, suggesting a decline of almost 32% year over year. XOM Can Lean on Strong Balance Sheet Despite the unfavorable developments, investors still like the stock since it has significantly lower exposure to debt capital. XOM's debt-to-capitalization of 12.2% is considerably lower than 28.14% of the composite stocks belonging to the industry. Image Source: Zacks Investment Research Therefore, if an unfavorable business event were to occur soon, ExxonMobil can rely on its strong balance sheet to navigate the uncertain business environment. What Should Investors' Stance Be on XOM Stock? Although the commodity pricing environment is not so favorable for XOM's upstream business, the integrated energy giant's strong footprint in the low-cost and prolific Permian and Guyana resources is likely to serve as a stimulus. This doesn't mean that investors should immediately rush to bet on the stock with a low debt profile. Moreover, the stock is currently overvalued as reflected in its trading at a 7.05x trailing 12-month Enterprise Value to Earnings Before Interest, Taxes, Depreciation and Amortization (EV/EBITDA), which is at a premium compared with the broader industry average of 4.23x. Image Source: Zacks Investment Research Thus, investors already invested in ExxonMobil should retain the stock. Currently, XOM carries a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report BP p.l.c. (BP) : Free Stock Analysis Report Chevron Corporation (CVX) : Free Stock Analysis Report Exxon Mobil Corporation (XOM) : Free Stock Analysis Report This article originally published on Zacks Investment Research ( Zacks Investment Research Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
4 days ago
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Do Upstream Mergers Really Deliver Value for Shareholders?
I've been noodling around with an idea for a while now. The thing on my mind is when do investors actually gain from the big gobs of money E&P companies spend on M&A? A lot of promises are made in the early days. But as time wears on, I rarely see any effort made to reconcile results with these promises. So bear with me as I go through this little exercise. Now I am not saying that M&A isn't necessary as strong companies buy out smaller, weaker companies to get their premium assets. That part of the transaction is easily understood, and I will review that thought in the ExxonMobil/Pioneer Natural Resources case as we go through this exercise. My point here is investors are still waiting for these results to show up in their mail box. In fairness, not a lot time has elapsed, but I think trends are instructive. Let's dive in. Upstream M&A: Shell game? The upstream industry has been on a buying binge the last several years with hundreds of billions worth of transactions on the books. One of the most notable thus far has been ExxonMobil's (NYSE:XOM) acquisition of Pioneer Natural Resources, for approximately $253 per share or a substantial $64.5 billion, including debt, in an all-stock transaction. As noted in the deal slide from the announcement, this was an 18% premium to recent pricing for Pioneer. In exchange for XOM diluting current holders of its stock by about 255 mm shares or ~6%, the company made some firm promises in regard to the future upside for the combined company. Among other things XOM holders were told the transaction would be 'immediately accretive to EPS.' Hold that thought. Some time has gone by since the deal closed in May of 2024 and it seemed appropriate to peek under the hood to see how the company was delivering on these commitments. It's also worth reviewing just what drove Exxon's interest in paying a premium to Pioneer to obtain their Midland acreage. The Industrial Logic of ExxonMobil and Pioneer Industrial logic is the term applied to these mega deals. It's one of the terms, along with synergy and accretive, that are bandied about on announcement day. As you can see below, Pioneer's Midland basin acreage was like a missing puzzle piece to Exxon's prior footprint in the play. Exxon is a technology company with a track record of pushing the envelope to drive down costs and increase production, but to fully deploy their technical expertise, they needed more room. When you snap the two pieces together, you get a blocky, connected plot of land that runs for 50-75 miles east and west, and the better part of a couple of hundred miles north and south. 1.4 million acres is a sizeable chunk of dirt. That's significant and opens the door to huge numbers of 4-5 mile laterals, with centralized logistics, sand, water, the stuff of fracking, and helping lock-in low cost of supply. The easy stuff put in place, XOM engineers are free to work their magic wringing maximum barrels out of each foot of completed interval. That's all great for the company, but does this add to the value of the company in a way that benefits shareholders? Something real, and tangible that they can spend. Today. Like the stock price going up. Or special dividends. It seems like it should, and that's where we will look next for any sign the company is about to embark on an enhanced shareholder rewards package. Capitalization is one metric by which we might judge the impact of a transaction. Suppose company A, worth X, buys company Z, worth Y. In that case, logic suggests that company AZ should match the value of the two merger partners, or X + Y. Referring back to our ExxonMobil example, on May 2nd, the day before the merger closed the share price of XOM was $116.21 per share. With 3,998,000,000 shares outstanding that works out to a capitalization of $462 bn. At the agreed price of $253 per share for Pioneer their capitalization was $59.5 bn. The two together should have created an entity worth $521 bn, a point from which the merger driven success of the company should have been a value accretion launching pad. By the end of 2024 XOM stock was trading at $107.27. With 4,424 bn shares outstanding the company's capitalization stood at $474 bn. In about six months, some $47 bn in capitalization had vanished into thin air. Investors were promised the transaction would be immediately accretive to earnings per share. In June, 2024 reporting for the second quarter showed EPS to be $2.14 per share. For the fourth quarter EPS was $1.67 per share. So no immediate accretion. Perhaps patience will pay off. For the first quarter of 2025 EPS was $1.76 per share and the forecast for Q-2 is $1.55 share. One step forward and another back. What matters is that, thus far the combined company has not equaled its standalone performance. This is a sobering thought in light of the dilution visited upon shareholders, and the expense the company is going to repurchase shares.I may be piling on a bit here as the time elapsed since the merger is minimal. ROCE or Return on Capital Employed, shows little sign of being moved significantly higher in the merger. For a Twelve-Trailing Month-TTM period, Exxon's ROCE was 0.10882, a slight improvement from Full Year-2024's 0.1082. Moving in the right direction, but after spending $64.5 bn in stock dilution, one might hope for a teensy bit more. Like I said, perhaps not enough time has gone by to attach much weight to the change in ROCE. Summing up So, where does that leave us as we eagerly anticipate another mega merger? I refer, of course, to the one that now hangs in the balance for Chevron (NYSE:CVX) and Hess (NYSE:HES), with an arbitrator set to rule on XOM's claim of primacy in the pre-emptive right to buy HESS' share in the Stabroek field, offshore Guyana. If we buy into CVX today it will cost us $150 per share. If the arbitrator rules in their favor and the assets of Hess are merged into CVX, will the price of CVX then become X+Y-dilution? Or the CVX price plus the Hess price of $171 per share, less the amount of stock CVX will print~$351 mm shares to meet the deal price of $60 bn? Will the combined company have a capitalization of $327 bn? If history is any guide this outcome is unlikely. It is certainly food for thought as another serial acquirer comes to mind. I refer here to Occidental Petroleum, (NYSE: OXY), which after the Anadarko deal of 2019 for $57 bn, and then the CrownRock deal of 2024 for $12 bn- a combined cash and stock outlay of $69 bn for a company with a present day capitalization of $42 bn. Warren Buffett with a 26.92% stake in OXY, for which he's paid an average of $51.92 per share, is down 21% on his investment. I wonder what his response would be today if the OXY plane landed in Omaha with a deal in management's pocket. I have a pretty good idea actually. I will reiterate-the Industrial logic of upstream M&A is abundantly clear. As an industry matures size and scale matter, and perhaps (likely) this is where value shows up for shareholders who remain long for an extended period. The company can continue to develop oil and gas deposits long after the standalone company would have drilled itself out of existence. But over the short run, it looks like a shell game to me. By David Messler for More Top Reads From this article on Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
5 days ago
- Business
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Exxon Mobil Earnings Preview: What to Expect
Spring, Texas-based Exxon Mobil Corporation (XOM) explores and produces crude oil and natural gas. With a market cap of $497.5 billion, the company provides exploration and production of integrated fuels, lubricants, chemicals, and refined products for the automotive, trucking, aviation, and shipping industries to reduce greenhouse gas emissions. The oil giant is expected to announce its fiscal second-quarter earnings for 2025 before the market opens on Friday, Aug. 1. Ahead of the event, analysts expect XOM to report a profit of $1.44 per share on a diluted basis, down 32.7% from $2.14 per share in the year-ago quarter. The company has consistently surpassed Wall Street's EPS estimates in its last four quarterly reports. More News from Barchart Heightened Trade Tensions Weigh on Crude Oil Prices Crude Oil Prices Tumble as Trump Remains Patient with Putin Nat-Gas Prices Soar as US Weather Forecasts Heat Up Get exclusive insights with the FREE Barchart Brief newsletter. Subscribe now for quick, incisive midday market analysis you won't find anywhere else. For the full year, analysts expect XOM to report EPS of $6.38, down 18.1% from $7.79 in fiscal 2024. However, its EPS is expected to rise 12.9% year-over-year to $7.20 in fiscal 2026. XOM stock has underperformed the S&P 500 Index's ($SPX) 11.6% gains over the past 52 weeks, with shares up marginally during this period. However, it outperformed the Energy Select Sector SPDR Fund's (XLE) 2.6% decline over the same time frame. XOM's underperformance is attributed to lower oil and natural gas prices, which have impacted its exploration and production activities. Weaker commodity pricing is expected to decrease earnings in its upstream business. Geopolitical risks also pose a threat, with regulatory and environmental hurdles further complicating the challenges. Industry refining margins, weaker crude prices, divestments, and higher expenses are additional factors contributing to the company's struggles. On May 2, XOM reported its Q1 results, and its shares closed down more than 2% in the following trading session. Its adjusted EPS of $1.76 beat Wall Street expectations of $1.74. The company's revenue was $83.1 billion, falling short of Wall Street forecasts of $84.2 billion. Analysts' consensus opinion on XOM stock is reasonably bullish, with a 'Moderate Buy' rating overall. Out of 24 analysts covering the stock, 15 advise a 'Strong Buy' rating, one suggests a 'Moderate Buy,' seven give a 'Hold,' and one recommends a 'Strong Sell.' XOM's average analyst price target is $122.78, indicating a potential upside of 7.8% from the current levels. On the date of publication, Neha Panjwani did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. This article was originally published on
Business Insider
6 days ago
- Business
- Business Insider
‘Buy the Dip,' Says Analyst Following Exxon Mobil's (XOM) Profit Warning
Exxon Mobil (XOM) is thinking of ways to save money amid a weakening commodity price environment. The energy giant issued a 'profit warning' on July 8, 2025, ahead of its second-quarter 2025 earnings report. Specifically, Exxon signaled that changes in liquid prices, including crude, condensate, and natural gas liquids, could reduce earnings by $800 million to $1.2 billion. Concurrently, fluctuations in natural gas prices are expected to reduce earnings by an additional $300 million to $700 million. Elevate Your Investing Strategy: Take advantage of TipRanks Premium at 50% off! Unlock powerful investing tools, advanced data, and expert analyst insights to help you invest with confidence. Make smarter investment decisions with TipRanks' Smart Investor Picks, delivered to your inbox every week. All in all, the oiler expects to haul in ~$2 billion less than expected when it reports its Q2 earnings on August 1st. Despite the setback, XOM stock has pushed ~4% higher since last week's profit warning. Of course, much of this information—like gas price trends—was already public, so investors were largely unfazed, and the market reaction to Exxon's warning was more muted than expected. Looking ahead, while Exxon's heavy reliance on its Upstream segment makes it sensitive to energy price swings, its solid financial position, attractive valuation, and robust dividend yield support a case for cautious Bullish optimism, even in the face of broader macroeconomic challenges. Commodity Market Headwinds Provide Entry Point Taking a step back, Exxon's total earnings in its first quarter of 2025 were $7.7 billion. Exxon is comfortably profitable, generating profit margins near or exceeding 10% in the past three years. Exxon's warning also highlights a broader shift in global commodity markets. Since reaching highs near $120 per barrel in 2022, Brent crude has gradually declined to around $70. And the trend may continue—the U.S. Energy Information Administration (EIA) forecasts Brent prices to fall further to $66 per barrel by 2026. This isn't just a short-term concern for Exxon; managing and mitigating the impact of prolonged price volatility will be critical to its long-term stability and performance. Strategic Response Leads to Cost-Cutting and Diversification In this vein, the company is pursuing cost-saving measures and pursuing growth in downstream and chemical operations. While the average person makes budget cuts when gas prices are high, energy companies like Exxon do the same when they are low. Critically, Exxon has been making cost-saving efforts for years, saving $12.7 billion since 2019 with a target of $18 billion by 2030. Exxon aims to reduce its break-even point to $35 per barrel by 2027 and $30 per barrel by 2030. So, should prices continue to fall, this ensures Exxon remains comfortably profitable. Exxon is also diversifying its earnings. For instance, Exxon's China chemical complex produces 1.7 million tons of polyethylene annually. So, this helps insulate its earnings from price fluctuations in energy. Decoding XOM's Growth, Resilience, and Dividend Yield Critically, Exxon's balance sheet affords it some flexibility during periods of volatility. Its debt-to-assets ratio is just 40%. Moreover, Exxon maintains a cash balance of $17 billion as of March 2025, according to TipRanks data. Looking at valuation, Exxon Mobil trades at a Price-to-Earnings (P/E) ratio of 15.2—about a 15% premium compared to its Energy sector peers. That premium may be warranted, given Exxon's stronger growth performance. Its year-over-year revenue increased by 2.21%, outpacing Chevron's (CVX) 1.19% and BP's (BP) -7.79%, suggesting greater resilience in its core business. On top of that, Exxon offers a solid dividend yield of 3.45%, adding to its appeal for income-focused investors. Is Exxon Mobil a Buy, Sell, or Hold? On Wall Street, XOM sports a Moderate Buy consensus rating based on ten Buy, five Hold, and zero Sell ratings in the past three months. XOM's average strock price target of $124.80 implies an upside potential of ~8% over the next twelve months. Last week, analyst Jason Gabelman from TD Cowen assigned XOM a Buy rating with a price target of $128, noting that, 'The company's upstream operations have exceeded expectations, showing better-than-forecast results due to higher liquid realizations and less impactful maintenance activities.' On the other side of the aisle, Mizuho analyst Nitin Kumar isn't as optimistic as others on Wall Street after issuing a Hold rating and setting a $124.00 price target on XOM. He believes that, 'although commodity prices were a headwind to earnings in the Upstream segment, we expect supporting pricing in Energy Products and Chemicals/Specialty Products to largely offset this weakness.' Exxon Mobil Offers Stability in a Volatile Energy Market Exxon Mobil is strategically positioned to weather energy price volatility. The muted reaction to its recent profit warning suggests the market had already priced in some downside risk. The company remains prepared for further declines in natural gas prices and continues to diversify through downstream and chemical initiatives. While Exxon is still heavily exposed to commodity fluctuations, its stock has remained remarkably stable, with a low beta of just 0.31. Investors also benefit from a dividend that has grown for 44 consecutive years—offering a reliable income stream. Looking ahead, investors should closely monitor global supply-demand trends and geopolitical risks, as these could still weigh on performance. That said, Exxon's long-term focus on structural efficiency, cost control, and shareholder returns—particularly through consistent dividend growth—positions it well for value creation over time.
