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Where Analysts’ Ratings for ExxonMobil Stand Right Now

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Oct. 23 2018, Updated 10:30 a.m. ET

Analysts’ ratings for ExxonMobil

In this series, we’ve examined ExxonMobil’s (XOM) third-quarter estimates, segmental earnings, and stock performance. We’ve also reviewed ExxonMobil’s stock price forecast range for the 16-day period leading up to its expected earnings release on November 2.

Let’s examine analysts’ ratings for ExxonMobil.

ExxonMobil is covered by a total of 22 Wall Street analysts. Of this total, six analysts (or 27%) have given it “buy” or “strong buy” ratings, 13 (or 59%) have given it “hold” ratings, and three (or 14%) have given it “sell” or “strong sell” ratings.

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Why analysts have mixed opinions

ExxonMobil is a financially stable company with comfortable leverage and a robust liquidity position. In fact, in the second quarter, ExxonMobil had the lowest debt in the industry. It also had surplus discretionary cash flow after covering its capex and dividend payments in the second quarter.

Further, ExxonMobil’s upstream portfolio is poised for growth, with its long-term global strategy in place. Plus, ExxonMobil’s downstream portfolio has a healthy global project pipeline, which is expected to bring in better returns for the company.

But ExxonMobil’s premium valuation is likely the reason for its “hold” and “sell” ratings. ExxonMobil is trading at a forward PE of 14.6x, higher than the peer average of 11.3x. Similarly, the company is trading at a forward EV-to-EBITDA (enterprise value-to-EBITDA) multiple of 6.8x, again above the peer average of 4.6x. Market participants are likely already factoring XOM’s expected growth and relatively sound financials into its valuations.

Analysts’ ratings for XOM’s peers

ExxonMobil’s peers Total (TOT), PetroChina (PTR), and YPF (YPF) have been rated as “buys” by 75%, 67%, and 71% of analysts, respectively. Chevron (CVX), BP (BP), and Royal Dutch Shell (RDS.A) have been tagged as “buys” by 74%, 40%, and 89% of analysts, respectively.

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