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XOM Stock Up 8% in a Year: Is Now the Time to Buy, Sell, or Hold?
XOMExxonMobil(XOM) ZACKS·2024-12-26 17:06

Core Insights - Exxon Mobil Corporation (XOM) has outperformed the industry with an 8.2% gain over the past year compared to the industry's 1.6% growth, indicating a strong market position and promising long-term outlook supported by profitable projects and shareholder returns [1]. Group 1: Financial Performance and Strategy - ExxonMobil's acquisition of Pioneer Natural Resources on May 3 has significantly enhanced its upstream portfolio, with 1.4 million net acres in the Delaware and Midland basins and an estimated 16 billion barrels of oil equivalent resources [3]. - The company maintains a lower debt-to-capitalization ratio of 13.34% compared to the industry's 22.36%, reflecting a robust balance sheet and improved financial position due to favorable commodity prices [5]. - ExxonMobil plans to generate 165billioninsurpluscashflowfrom2025to2030,whichwillsupportincreasedshareholderdistributions,includingdividendsandsharerepurchases[23].Group2:InvestmentandGrowthPlans−Thecompanyaimstoinvest165 billion in surplus cash flow from 2025 to 2030, which will support increased shareholder distributions, including dividends and share repurchases [23]. Group 2: Investment and Growth Plans - The company aims to invest 30 billion in low-carbon solutions from 2025 to 2030, focusing on carbon capture, storage networks, and hydrogen facilities, aligning with global energy transition goals [7]. - ExxonMobil plans to double production in the Permian Basin to 2.3 million barrels of oil equivalent per day by 2030, indicating a strong growth trajectory in its key operational areas [20]. - A total investment of 140billioninmajorprojectsandPermianBasindevelopmentby2030isplanned,althoughthiscouldposefinancialstrainifenergypricesdonotmeetexpectations[25].Group3:MarketPositionandValuation−ThecurrentvaluationofExxonMobilstandsat6.30xtrailing12−monthEnterpriseValue/EBITDA,whichisapremiumcomparedtotheindustryaverageof3.93x,suggestingpotentialovervaluation[9].−WallStreet′saveragepricetargetforXOMindicatesapotentialupsideof22.5140 billion in major projects and Permian Basin development by 2030 is planned, although this could pose financial strain if energy prices do not meet expectations [25]. Group 3: Market Position and Valuation - The current valuation of ExxonMobil stands at 6.30x trailing 12-month Enterprise Value/EBITDA, which is a premium compared to the industry average of 3.93x, suggesting potential overvaluation [9]. - Wall Street's average price target for XOM indicates a potential upside of 22.5% from its recent closing price of 106.40, with the highest target reaching $147, representing a possible gain of 38.2% [26].