Exxon Mobil is a major player of the Integrated Oil and Gas Industry. It were incorporated in 1882 and is engaged in exploration for and production of crude oil and natural gas, manufacture of petroleum products as well as transportation and sale of crude oil, natural gas and petroleum products. The company is also manufacturers and marketer of various petrochemical and it has interests in electric power and generation facilities. Among its famous divisions and affiliates are named Exxon Mobil, Exxon, Esso, or Mobil.
The company operates as well in three segments which include Upstream, Downstream and Chemicals.
Falling under the Upstream segment are the company’s global exploration, development and production as well as power and marketing activities. The Downstream segment refers to the manufacture and marketing of petroleum products while the Chemical segment refers to manufacture and sales of petrochemicals. This paper seeks to analyze the stock of Exxon Mobil Corporation (Exxon Mobil) whether the company is worth investing into by looking at the company’s financial performance, liquidity and solvency position, market ratios and dividends conditions for the past five years.
This paper will also look into the analysts’ estimate and projection, what The Wall Street analyst had to say about company and any relevant news about the status of its stock. In addition, the paper will definitely look into the company’s PE ratio, as well its condition in relation to competition and to determine likely future of company in the coming years.
Financial analysis will entail the use of relevant rations to evaluate the company’s record for Profitability and Management Efficiency Average return on equity (ROE) for 33.
96% for the past five years of Exxon Mobil PLC shows superiority about its past performance in relation to the industry average of 24. 19%. An average of about 34% return on equity definitely attracts investors as it would mean that for every 100 US dollars the investors expect returns of about 34 dollars. Its ROE is even higher if the basis is the latest 12-month rate of 38.53s as against the industry average of 22. 57%. These rates could be viewed as something extraordinary for a company like Exxon Mobil given the present condition of the economy.
It may be noted that return on equity uses the formula where net profit is divided by the total stockholders’ equity. When compared to an average rate of 0. 25% if money was invested in a bank, its present ROE makes the finding of offering more that hundred-fold and the rate is something very rate to find for investors. The 0. 25% is the US base rate of the Federal Reserve Bank that could represent the risk free rate investment in the US and could be used as the minimum bank rate.
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