How Analysts Rate ExxonMobil Stock ahead of 1Q18 Earnings



Analyst ratings for ExxonMobil

In this series, we’ve examined ExxonMobil’s (XOM) 1Q18 estimates, segmental earnings outlook, and stock performance. We also reviewed ExxonMobil’s stock forecast range for the 14-day period until its earnings release, which is on April 27, 2018. Now, we’ll examine analyst ratings for ExxonMobil.

A total of 24 analysts cover ExxonMobil. Of the total, eight analysts have assigned “buy” or “strong buy” ratings, 12 have assigned “hold” ratings, and four have assigned “sell” or “strong sell” ratings on the stock.

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Why analysts have mixed opinions on ExxonMobil

ExxonMobil (XOM) is a financially strong company with comfortable leverage and a good liquidity position. The company’s total-debt-to-total-capital ratio stands at 18%. In comparison, CVX, Shell, and BP have ratios of 21%, 30%, and 39%, respectively. Also, XOM has a surplus of discretionary cash flow after covering its capex and dividend payments. In 2017, XOM’s excess cash flow stood at 6% (as a percentage of cash flow from operation).

Plus, XOM’s expansion activities, spread across its business segments, are making its earnings model more “integrated,” partially protecting it from oil price volatility. We have discussed ExxonMobil’s growth activities in ExxonMobil Is All Set to Double Its Earnings: Let’s Take a Look.

However, the majority of analyst ratings for ExxonMobil are a “hold” or “sell” possibly because of the higher valuation that XOM enjoys compared to its peers. Market participants are probably already factoring in XOM’s expected growth and relatively sound financials.

Analyst ratings for peers

Peers Total (TOT), Statoil (STO), and YPF (YPF) have been rated as “buy” by 33%, 20%, and 92% of analysts, respectively. Chevron (CVX), BP (BP), and Royal Dutch Shell (RDS.A) have been rated as a “buy” by 78%, 46%, and 91% of analysts, respectively.


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