uploads///Analyst Rec

ExxonMobil, Chevron, Shell, BP: Which One Is Analysts’ Favorite?

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Nov. 20 2020, Updated 4:38 p.m. ET

XOM, CVX, RDS.A, BP: A Look at analysts’ ratings

Integrated energy companies ExxonMobil (XOM), Chevron (CVX), Royal Dutch Shell (RDS.A), and BP (BP) have been rated by 26, 28, 12, and 11 analysts, respectively. Of those analysts, 19.0%, 71.0%, 92.0%, and 36.0% have rated XOM, CVX, RDS.A, and BP a “buy,” respectively.

Royal Dutch Shell (RDS.A) has received the most “buy” ratings among the integrated energy stocks in this series. That’s most likely due to its strategy to cut capex (capital expenditure), reduce costs, and divest non-competitive assets.

Shell’s acquisition of BG Group could bring growth in earnings and the benefits of operational synergies. Please refer to Analyst Ratings for Shell: Why Most Rate It A ‘Buy‘ to find out why most analysts have assigned positive ratings to Shell.

Chevron has received mostly “buy” ratings since its capital-intensive projects are now on the verge of yielding results. Please refer to Why Most Analysts Rate Chevron a ‘Buy’ to find out more.

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‘Hold’ and ‘sell’ ratings for integrated energy stocks

BP has the most “hold” ratings among our four integrated energy stocks. About 64.0% of analysts have recommended a “hold” for the stock. Although BP’s strict financial discipline and growth initiatives could work in its favor, most analysts are taking a cautious approach until the results are visible. Please refer to BP: Why Most Wall Street Analysts Say ‘Hold’ for more information on BP.

ExxonMobil has a lot of “hold” ratings, although it’s a financially steady company with a comfortable leverage position. The company has an integrated growth approach to extract value out of every molecule of hydrocarbon at each stage, from production to marketing of refined fuel. It’s thus expected to improve its financials further. For more on ExxonMobil’s (XOM) growth plans, please refer to ExxonMobil Has Big Plans for Integrated Growth in 2017.

But most analysts are still rating XOM a “hold,” likely due to XOM’s premium valuations, which are already factoring in the company’s expected growth. XOM is the only stock among our four companies to receive “sell” ratings from 23.0% of analysts.

If you’re looking for exposure to large US companies, you can consider the SPDR Dow Jones Industrial Average ETF (DIA). DIA has a ~6.0% combined exposure to integrated energy majors XOM and CVX. The SPDR S&P 500 ETF (SPY) has a ~7.0% exposure to energy sector stocks, including XOM and CVX.

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