Investigating Exxon Stock Long Term
sunglow | 10 April, 2008 04:40
Exxon stock (NYSE: XOM) is one of the most sought after long terms
investments. The nearly $500 billion company, is a virtual cash cow.
Many see solid returns from Exxon as inevitable as taxes and death.
With oil hovering around $100 per barrel and Exxon up over 136%
(ex-dividend), is 2008 the right time to make this entry long term?
The reality is that for the past five years Exxon has demolished the returns of the S&P 500. This is an enticing tidbit for many prospective investors. If you look a little deeper into its peer group, however, you may notice that Exxon has some interesting weaknesses. For example, its net margin, around 10%, but foreign companies PetroChina (NYSE: PTR), Petroleo Brasileiro (NYSE: PBR), Eni S.P.A. (NYSE: E), and Petro-Canada (NYSE: PCZ) all have better net margins, ranging from 11.1%-19.9%. Also, with regards to its price-to-earnings, Exxon stock is currently sitting at 11.8x earnings. All but one of the largest ten companies in its industry offer more value on a price-to-earnings scale. Even relative to its own seven year price-to-earnings scale, Exxon is falls right in the middle of its range (8.25-14.01) of its 3 year P/E history. PA3191U-5BRS , TOSHIBA PA3191U-5BRS Battery, PA3191U-5BRS Battery,
Many investors appreciate the premium that Exxon trades at because of its stable growth and solid management. Its long term growth rate is projected at 5.8% this year compared to an average of 1.9% among integrated oil and gas companies and 2.4% for the Energy sector as a whole. Short term, things look less rosy for Exxon with its estimated growth at 11.2%, compared with 17.5% for the integrated companies and 20.2% for the Energy sector as a whole.
Analysts tend to be overweight Exxon in the recommendations. Currently, 4 have the company as buy, 6 as overweight, and 8 as hold. Weighing all of these factors and the potential for reces
The reality is that for the past five years Exxon has demolished the returns of the S&P 500. This is an enticing tidbit for many prospective investors. If you look a little deeper into its peer group, however, you may notice that Exxon has some interesting weaknesses. For example, its net margin, around 10%, but foreign companies PetroChina (NYSE: PTR), Petroleo Brasileiro (NYSE: PBR), Eni S.P.A. (NYSE: E), and Petro-Canada (NYSE: PCZ) all have better net margins, ranging from 11.1%-19.9%. Also, with regards to its price-to-earnings, Exxon stock is currently sitting at 11.8x earnings. All but one of the largest ten companies in its industry offer more value on a price-to-earnings scale. Even relative to its own seven year price-to-earnings scale, Exxon is falls right in the middle of its range (8.25-14.01) of its 3 year P/E history. PA3191U-5BRS , TOSHIBA PA3191U-5BRS Battery, PA3191U-5BRS Battery,
Many investors appreciate the premium that Exxon trades at because of its stable growth and solid management. Its long term growth rate is projected at 5.8% this year compared to an average of 1.9% among integrated oil and gas companies and 2.4% for the Energy sector as a whole. Short term, things look less rosy for Exxon with its estimated growth at 11.2%, compared with 17.5% for the integrated companies and 20.2% for the Energy sector as a whole.
Analysts tend to be overweight Exxon in the recommendations. Currently, 4 have the company as buy, 6 as overweight, and 8 as hold. Weighing all of these factors and the potential for reces
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