$XOM Stock Analysis - is Exxon Mobil Stock a Good Buy Today - $XOM | Summary and Q&A

TL;DR

Exxon Mobil's downstream business dominates its revenue, with non-US revenue playing a significant role. Despite the rise of electric vehicles, the consumption of crude oil and liquid fuels is expected to increase in the future. Factors such as crude oil prices, natural gas consumption, and the crack spread impact Exxon Mobil's revenue. Analyst estimates and discounted free cash flow valuation suggest a fair value of around $58 per share for the stock.

Key Insights

• 🖐️ Exxon Mobil's downstream business plays a significant role in its revenue, with non-US revenue being dominant.
• 🫗 Despite the growth of electric vehicles, the consumption of crude oil and liquid fuels is expected to gradually increase in the future.
• 🫢 Factors such as crude oil prices, natural gas consumption, and the crack spread impact Exxon Mobil's revenue.
• 🥶 Analyst estimates and discounted free cash flow valuation suggest a fair value of around $58 per share for Exxon Mobil's stock.
• ❓ Maintaining a dividend is important to Exxon Mobil, and the current dividend yield is around 8%.
• 🔬 The hesitation in investing in Exxon Mobil is the choice between it and Chevron, which has a dividend yield of about 6%.
• 🇨🇷 Dividend yield on cost is an essential consideration for dividend investors, and understanding it is crucial.

Transcript

hi i'm jimmy in this video we're looking at  exxon mobil ticker symbol xom we're going to look   quickly at exxon mobil's business and then we're  going to see if we can come up with a fair value   for exxon mobil stock using a discounted free  cash flow valuation okay so before we jump in   uh just recently i actually did a video where i  went thr... Read More

Questions & Answers

Q: What are the primary segments of Exxon Mobil's business?

Exxon Mobil has three primary segments: downstream, chemicals, and upstream. The downstream segment focuses on refining and marketing, while the chemicals segment produces plastics. The upstream segment involves drilling for oil and gas.

Q: How does the consumption of crude oil and liquid fuels look in the future?

Despite the rise of electric vehicles, the consumption of crude oil and liquid fuels is expected to increase gradually in the future. There are over 1.2 billion gasoline vehicles worldwide, compared to a few million electric vehicles. As economies recover and come back online, consumption is likely to ramp up.

Q: What factors impact Exxon Mobil's revenue?

Factors such as crude oil prices, natural gas consumption, and the crack spread impact Exxon Mobil's revenue. Lower crude oil prices lead to decreased revenue, while higher natural gas consumption contributes to revenue growth. The crack spread, which estimates the profit per barrel of oil in the downstream business, also affects revenue.

Q: What is the fair value of Exxon Mobil's stock?

Using analyst estimates and discounted free cash flow valuation, the fair value of Exxon Mobil's stock is around $58 per share. This calculation takes into account the expected negative free cash flow in 2020 and the impact of net debt.

Summary & Key Takeaways

• Exxon Mobil has three primary business segments: downstream, chemicals, and upstream. The downstream segment dominates revenue, with non-US revenue being significant.

• Consumption of crude oil and liquid fuels is expected to increase gradually in the future, despite the rise of electric vehicles.

• Factors such as crude oil prices, natural gas consumption, and the crack spread impact Exxon Mobil's revenue.

• Analyst estimates and discounted free cash flow valuation suggest a fair value of around $58 per share for Exxon Mobil's stock.