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Exxon Keeps Pumping

Written by: Jim Van Meerten 08/03/12 - 12:36 PM EDT
Tickers in this article: XOM BP CVX RDS.A

Fundamental factors:

  • Wall Street has long considered this stock as a long-term conservative income position and 18 brokerage firms have assigned 20 analysts to formulate projections
  • Analysts project revenue will decrease by 3.7% this year and maybe another 0.20% next year
  • Earnings estimates are for a decrease of 9.9% this year but an increase of 4.7% next year and a continued increase of 8.2% annually for the next five years
  • The consensus estimate resulted in four strong buy, seven buy, nine hold and no underperform or sell recommendations to their clients
  • Analysts think investors could look to realize a total annual return in the 12% to 14% range over the next five years
  • The P/E is 11 compared to a market P/E of 14.3
  • The 2.62% dividend rate is about 25% of projected earnings and in line with the market dividend rate of 2.50%
  • The balance sheet rates an A++ score
  • TheStreet rating is B+
  • Although oil usage is down with the economy, oil prices are inching back up
  • The company's production has been down as its present leases mature but expansion into new fields in Russia may bring those production figures back up
  • New industrial chemical production facilities mainly in Saudi Arabia may also increase revenue

Investor interest:

  • The stock is widely followed by both professional and individual investors, and many individual investor websites have a surprising high number of subscribers having this stock on their watch lists
  • This may not be a good time to enter into new positions in this stock but Raymond James, Goldman Sachs, Oppenheimer and UBS continue to encourage clients to maintain their positions for long-term investors
  • Please note that since the beginning of the year short interest has been slowly inching up as oil prices declined

The stock's price held up well against most of its peers. During the last year XOM was up 12% while Chevron(CVX) was up 7% as was Royal Dutch Shell (RDS.A) . However, BP(BP) was down 7%:

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Projections for competitors:

Chevron

  • TheStreet rating A
  • Dividend rate 3.26%
  • Revenue to increase 1.7% this year and 3.4% next year
  • Earnings estimated to decrease by 3.9% this year and another 3.2% next year