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XOM Analysis Price vs. Fair Value Trailing Returns Financials Valuation Operating Performance Dividends Ownership Executive Profile

Exxon Mobil Corp XOM QQQQQ Dec 23, 2020

Show Full Chart Quote Key Ratios Short Interest News

$
41.42 0.35 | 0.84% Bid/Size Ask/Size Day Range Volume / Avg
41.42×5 41.43×9 41.40 – 41.85 3.0 Mil /
42.13 174,248.4
Year Range Forward Div Yield Market Cap Investment Style

Previous Close 41.77

30.11 – 71.37 8.33% 175.2869 Bil 1 Large Value

41.41 Price/Sales Beta (5-Year) Consensus Forward Price/Book

0.91 1.35 P/E 1.00
10a 12p 2p
28.49
USD | New York Stock Exchange | Prices updated as of Dec 24, 2020, 10:32 AM EST |
BATS BZX Real-Time Price

Morningstar's Analysis Summary Competitors Bulls Say/Bears Say

Valuation Dec 01, 2020 Currency in USD ExxonMobil’s Growth Plans Have Merely Been Delayed, Not Derailed As It
Protects the Dividend
XOM is Significantly Undervalued at a 44%
Discount.
Allen Good
Sector Strategist
Q Fair Value
QQ 74.00 Business Strategy and Outlook | by Allen Good Updated Dec 01, 2020
Uncertainty: Medium Although it has reduced spending in the near term to protect the dividend, ExxonMobil still plans
QQQ
QQQQ to ramp up capital spending with the goal of doubling earnings from 2017 even as the target
Last Close date has slipped to 2027 from 2025 originally. Positively, however, it will be able to do so now
QQQQQ
41.77 with less capital spending than previously thought thanks to the realization of $10 billion in
capital spending savings and a 15% reduction in operating expenses that includes a 15% global
1-Star Price workforce reduction by year-end 2021. It expects spending of $20 billion-25 billion annually
> 99.90 through 2025 compared with $30 billion-35 billion previously. As such, Exxon is still breaking
Economic Moat with much of the integrated pack that has committed to restraining capital spending in
Narrow hydrocarbons, increasing cash returns to shareholders and moving toward a low-carbon
Trend: Stable
business model.
5-Star Price
< 51.80
While investors have been clamoring for greater capital discipline from integrated oils, Exxon’s
Stewardship view is it holds a host of high-return projects that can leverage its superior integrated model and
Exemplary
thus warrant investment. We have long argued, and the historical returns support our
contention, Exxon is the highest-quality integrated overall (operating and assets) and its
downstream and chemicals segments are key differentiators. Although its lead in returns has
diminished, it still stands to reason it should invest to maximize whatever advantages it retains.
However, integrated oils have a spotty record of delivering on long-dated volume and return
targets. Execution and price risk are thus high. That said, ExxonBusiness Strategy
is one of and Outlook
the better operators
and developers in the world, and its plan includes a high portion of operated
Economic Moat projects, increasing
the chances for success, in our view. Fair Value and Profit Drivers
Riskgrowth.
The upstream segment will still likely lead the long-term earnings and Uncertainty
Exxon has bolstered
its portfolio over the last few years through discovery (Guyana)Stewardship
and acquisition (Permian,
Mozambique), and these new resources will contribute the bulkCloseof any new volume growth.
Full Analysis
Meanwhile, more marginal assets such as North American gas will be pushed out of the
development plan or sold, leaving Exxon with an overall higher-quality portfolio in five years.

Economic Moat | by Allen Good Updated Dec 01, 2020

We continue to rate Exxon as one of the higher-quality integrated firms, given its ability to
capture economic rents along the oil and gas value chain. While its peers operate a similar
business model with the same goal, they fail to do so as successfully, as evidenced in the lower
margins and returns compared with Exxon. Exxon generates its superior returns from the
integration of low-cost assets (an intangible asset that we consider to be part of its moat source)
combined with a low cost of capital; this combination produces excess returns greater than
those of its peers. However, given our outlook for lower long-term oil and natural gas prices, we
expect Exxon's returns to be lower than they have been in the past. Additionally, its decision to
increase investment relative to peers is also likely to narrow the gap in returns with peers.
Consequently, our confidence that it can continue to deliver excess returns for longer is
diminished, resulting in the company earning a narrow moat.

Although we believe Exxon has ceded some ground to peers as it has added higher-cost oil
sands volumes, we think its overall upstream portfolio maintains a low-cost position. Its margins,
reserve life, finding and development costs, and returns on capital have historically ranked
amongst the best of the integrated group. While in the near term these metrics will suffer as
investment increases in longer-dated production growth, ultimately these new projects should
bolster its competitive position with an average break-even of $40/bbl. We also think Exxon
distinguishes itself with greater integration amongst its downstream segment, which has also
contributed to its higher returns on capital. This differentiator should become more valuable in
capturing economic rents as it seeks to increase U.S. production volumes, where prices often
trade at a discount to global benchmarks.

The size and physical integration between Exxon’s refining and chemical manufacturing is a
unique asset that creates an unequaled advantage that cannot realistically be duplicated.
Approximately 80% of its refining capacity is integrated with chemical-manufacturing facilities.
The integrated network delivers wider margins and returns than peers, thanks to a low-cost
position derived from economies of scale and the ability to process a variety of feedstocks into
the highest-value products. As a result, Exxon's downstream averaged returns on capital
employed have historically far outpaced the group average.

Fair Value and Profit Drivers | by Allen Good Updated Dec 01, 2020
We are increasing our fair value estimate to $74 from $72 per share after incorporating the latest
capital spending guidance, which is lower than what we anticipated. We have slightly lowered
the growth assumption in our terminal value calculation which previously was accounting for
long-term earnings growth from increased capital spending given the delays in earnings targets
expected by management. Our fair value estimate implies a forward enterprise value/EBITDA
multiple of 12.1 times our 2021 EBITDA forecast of $27.4 billion. Our fair value estimate is
derived using Morningstar’s standard three-stage discounted cash flow methodology. With this
methodology, a terminal value is derived using our assumptions for long-term earnings growth
and return on new invested capital. This valuation methodology also more explicitly incorporates
our moat rating, which reflects how long we expect a given firm to deliver excess returns on
invested capital from a discounted cash flow analysis.

In our DCF model, we assume U.S. natural gas prices of $3.12 per thousand cubic feet in 2021
and $2.89 in 2022. Our long-term assumption is $2.80 beginning in 2023. For oil, we assume
Brent prices of $45 per barrel in 2021 and $50 per barrel in 2022. Our long-term oil-price
assumption is $60 per barrel. We assume a cost of equity of 7.5% and a weighted average cost
of capital of 7.1%.

We assume Exxon’s production grows during the next five years, but falls short of its previous
production target of 5.0 mmboe/d in 2025 given near-term delays in new projects, particularly
the Permian, as near-term spending is reduced. Our growth forecast is premised on oil prices
recovering to $60/bbl and an increase in spending from current levels. We forecast steady
earnings growth in the downstream and chemical segments as new projects and capacity are
brought online during the next five years. However, all three segments will see earnings likely
fall in the next two years given the economic fallout from the coronavirus.

Risk and Uncertainty | by Allen Good Updated Dec 01, 2020

Exxon holds a medium uncertainty rating based on the outcome of our scenario analysis.

As a company with global operations, geopolitical risk is always an issue. Past events in Russia,
Nigeria, and Venezuela underscore the risk associated with doing business in those countries. By
investing in large, capital-intensive projects, Exxon also runs the risk that commodity prices will
decrease dramatically, making those projects no longer economical. Changes in policy related to
climate change could result in higher costs, reduced demand, or stranded resources. A more
immediate risk involves lawsuits related to climate change disclosure whose outcome is
uncertain.

Stewardship | by Allen Good Updated Nov 30, 2020

Darren Woods succeeded Rex Tillerson as chairman and CEO in January 2017. Tillerson had
served in those roles since 2006. Woods most recently served as president of the company and
has spent the bulk of his career at Exxon in the refining and chemical segments.

Woods' latest strategy plan to invest for growth differentiates Exxon from its peer group and
could ultimately deliver for shareholders. However, the long-dated nature of its targets, the near-
term increased spending, the decline in commodity prices and a spotty history of delivery of
long-term targets mean the plan holds risk. Woods' tenure will be judged on Exxon’s ability to
deliver on the heady targets it has announced. Given that signs of success will take time,
investors will have to be patient.

We do not see anything in the new strategy that invalidates our Exemplary stewardship rating.
Despite the increase in spending, it is not being done so recklessly in our view, as capital
expenditures will be funded with operating cash flow, while management has expressed
confidence in excess returns at a variety of commodity price levels.

ExxonMobil's record of generating shareholder returns and history of disciplined capital

allocation (outside some mistimed acquisitions) give us confidence it will keep returns as a
priority as it executes on its new plan.

As part of its growth plan, Exxon aims to improve in one area where it has lagged. Historically its
quarterly disclosures failed to include key operating and financial data. Also, management did
not typically appear on conference calls. However, Woods has committed to improvements by
 including greater disclosure and making executives available quarterly to make it easier to track
the progress of its strategic plan, a welcome change.

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Price vs. Fair Value Advanced Basic Logarithmic Linear

Fair Value
200
74.00
150
Last Close
41.77
100

50
Overvalued
Fairly Valued
30 Undervalued
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 YTD  
0.85 0.86 0.95 1.04 0.86 0.90 1.14 1.07 0.76 0.82 0.56 Price/Fair Value
9.78 18.45 4.68 19.77 -5.98 -12.57 19.62 -3.94 -14.61 7.36 -35.15 Total Return %
-7.01 16.87 -11.58 -13.36 -18.83 -13.26 7.18 -25.42 -9.56 -23.86 -55.12 +/- Index
USD | As of Dec 23, 2020 | Index: Morningstar US Market TR USD

Trailing Returns Daily Monthly Quarterly

36.00

0.00
0.00
-36.00
-36.00
Total Return % 1-Day 1-Week 1-Month 3-Month YTD 1-Year 3-Year 5-Year 10-Year 15-Year

XOM 1.29 -4.42 6.12 23.99 -35.15 -35.62 -14.81 -6.29 -0.44 2.07
Oil & Gas Integrated 2.16 -3.23 1.51 25.55 -30.24 -30.18 -11.00 -1.33 -2.23 0.63
Morningstar US Market TR USD 0.06 0.31 4.45 17.34 19.45 19.69 14.06 15.02 13.77 9.93

+/-Oil & Gas Integrated -0.88 -1.19 4.61 -1.56 -4.91 -5.44 -3.81 -4.96 1.79 1.43
+/-Morningstar US Market TR USD 1.22 -4.72 1.68 6.65 -54.60 -55.31 -28.87 -21.31 -14.22 -7.87
As of Dec 23, 2020 | Sector: Oil & Gas Integrated | Index: Morningstar US Market TR USD

Financials
Valuation Growth (3-Year Annualized)

Price/Book Price/Cash Flow Price/Sales Price/Earnings Revenue % Operating Income % Net Income % Diluted EPS %
1.00 10.48 0.91 53.48 8.40 66.39 22.30 21.36

As of Dec 22, 2020 As of Dec 30, 2019

Financial Health Profitability
Return on
Quick Ratio Current Ratio Interest Coverage Debt/Equity Return on Assets % Return on Equity % Invested Capital % Net Margin %
0.51 0.86 4.96 0.39 0.93 1.81 1.70 1.70

As of Sep 29, 2020 As of Sep 29, 2020

Annual Quarterly As Originally Reported Restated

Income Statement
Revenue Net Income
  TTM 2019 2018 2017 3-Yr Trend
300
$ Bil Revenue (Bil) 195.86 255.58 279.33 237.16
Operating Income (Bil) -0.07 12.77 22.12 12.07
150
Net Income (Bil) 3.32 14.34 20.84 19.71
0 Diluted EPS 0.78 3.36 4.88 4.63
2019 2018 2017 Normalized Diluted EPS 0.78 3.36 4.88 4.63

Balance Sheet
Assets Debt Debt/Assets
  Q3 2020 2019 2018 2017 3-Yr Trend
400 20%
$ Bil Total Assets (Bil) 358.04 362.60 346.20 348.69
Total Liabilities (Bil) 173.43 163.66 147.67 154.19
200 10
Total Debt (Bil) 68.80 46.92 37.80 42.34
0 0 Total Equity (Bil) 184.61 198.94 198.53 194.50
2019 2018 2017 Cash, Cash Equivalents 8.83 3.09 3.04 3.18
and Short Term
Investments (Bil)

Cash Flow
Operating Investing Financing
  TTM 2019 2018 2017 3-Yr Trend
40
$ Bil Operating (Bil) 17.02 29.72 36.01 30.07
Investing (Bil) -19.42 -23.08 -16.45 -15.73
0
Financing (Bil) 6.11 -6.62 -19.45 -15.13
-40 Free Cash Flow (Bil) -3.34 5.36 16.44 14.66
2019 2018 2017

Fiscal year ends in Dec 31 | USD in Bil except per share data

Valuation
2010
Calendar 2011 2012 2013 2014 2015 2016 2017 2018 2019 Current 5-Yr

53.55

0.96
Price/Sales 0.90 0.88 1.06 0.96 1.15 1.73 1.45 1.05 1.14 0.91 1.26
11.76
Price/Earnings 10.21 8.92 13.21 11.63 16.45 42.18 27.24 12.53 20.28 53.55 24.18
7.40
Price/Cash Flow7.26 7.13 9.42 8.32 9.83 19.78 11.78 8.36 9.32 10.48 11.08
2.48
Price/Book 2.57 2.35 2.59 2.15 1.90 2.19 1.95 1.52 1.56 1.00 1.71

USD | As of Dec 23, 2020 | Index: Morningstar US Market TR USD

More Valuation Data
Operating Performance
Fiscal 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 TTM 5-Yr

28.03

11.37 on Assets
Return 12.96
% 13.50 9.57 9.34 4.71 2.35 5.81 6.00 4.05 0.93 4.07
23.67 on Equity
Return 27.26
% 28.03 19.17 18.67 9.36 4.64 11.10 10.98 7.48 1.81 7.80
21.72 on Invested
Return 24.74Capital %25.84 17.42 16.34 7.93 3.87 9.12 9.28 6.36 1.70 6.55

USD | Index: Morningstar US Market TR USD

More Operating Performance Data

Dividends & Splits Dividends Splits

Calendar
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Current TTM

8.33

Dividend
1.74 Per Share
1.85 2.18 2.46 2.70 2.88 2.98 3.06 3.23 3.43 3.48 3.48
Trailing
2.38 Dividend2.18
Yield % 2.52 2.43 2.92 3.69 3.30 3.66 4.74 4.92 8.33 8.33
Buyback
3.31Yield % 5.17 5.36 4.08 3.39 2.03 0.39 0.22 0.23 0.21 0.27 0.27
Total 5.69
Yield % 7.35 7.88 6.51 6.31 5.72 3.69 3.88 4.97 5.13 8.60 8.60
446.15
21.93

Payout
27.97 Ratio %21.93 22.47 31.33 33.21 59.92 138.32 99.02 58.46 98.26 446.15 446.15

Ex-Dividend Declaration
Date Date Record Date Payable Date Dividend Type
2020
Nov 10, 2020
Oct 29, 2020 Nov 12, 2020 Dec 10, 2020 Cash Dividend
Aug 12, 2020
Jul 29, 2020 Aug 13, 2020 Sep 10, 2020 Cash Dividend
May 12, 2020
Apr 29, 2020 May 13, 2020 Jun 10, 2020 Cash Dividend
Feb 10, 2020
Jan 29, 2020 Feb 11, 2020 Mar 10, 2020 Cash Dividend
2019
2018
2017
2016

Dividend Yield (TTM) Div Reinvestment Plan

8.33% Yes

USD | As of Dec 23, 2020

Ownership Major Concentrated Buying Selling Funds Institutions

Total Ownership
 Name Morningstar % Total % Total Trend Current Shares Change Amount C
Rating Shares Held Assets Prev. 8 Qtrs

Vanguard Total Stock Mkt Idx Inv QQQQ 2.83 0.44 119,611,384 210,781
Vanguard 500 Index Investor QQQQ 2.05 0.54 86,859,709 311,068
Energy Select Sector SPDR® ETF QQQQQ 1.55 20.78 65,407,899 385,776
SPDR® S&P 500 ETF Trust QQQQ 1.08 0.54 45,556,430 134,567
Fidelity® 500 Index QQQQ 0.90 0.51 38,200,388 96,520
Total (for Top 5) 8.41 355,635,810 54,402

More Ownership Data

Executive Team Key Executives Board of Directors Committees Transaction History

Compensation USD

Name Title Age 2014 2015 2016

Darren W. Woods Chairman of the Board and Chief Executive Officer 55 — 10,294,872 16,846,928 17,46
Andrew P. Swiger Senior Vice President and Principal Financial Officer 63 16,134,556 14,902,362 15,556,747 11,2
Neil A. Chapman Senior Vice President 57 — — —
Jack Williams Senior Vice President 56 — — —
Neil W. Duffin President, ExxonMobil Global Projects Company 63 — — — 7,87
Compensation for all Key Executives 16,134,556 25,197,234 32,403,675 36,56

More Executive Team Data

Company Profile
Business Description Contact Sector Industry
ExxonMobil is an integrated oil and gas company that 5959 Las Colinas Boulevard, Irving, TX Energy Oil & Gas Integrated
explores for, produces, and refines oil around the world. In 75039-2298
T +1 972 940-6000 Most Recent Earnings Fiscal Year End
2019, it produced 2.4 million barrels of liquids and 9.4
www.exxonmobil.com Sep 30, 2020 Dec 31, 2020
billion cubic feet of natural gas per day. At the end of
2019, reserves were 22.4 billion barrels of oil equivalent Stock Type Employees
(including 3.8 billion for equity companies), 65% of which Hard Asset 74,900.00
are liquids. The company is the world's largest refiner with As of Dec 30, 2019

a total global refining capacity of 4.7 million barrels of oil

per day and one of the world's largest manufacturers of
commodity and specialty chemicals. It operates its
business divisions in North and South America, Europe,
the Middle East, North and sub-Saharan Africa, and Asia-
Pacific.

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