Exxon Mobil Corp Valuation – November 2018 $XOM

Company Profile (excerpt from Reuters): Exxon Mobil Corporation, incorporated on August 5, 1882, is engaged in energy business. The Company is engaged in the exploration, production, transportation and sale of crude oil and natural gas, and the manufacture, transportation and sale of petroleum products. The Company also manufactures and markets commodity petrochemicals, including olefins, aromatics, polyethylene and polypropylene plastics, and a range of specialty products. The Company’s segments include Upstream, Downstream, Chemical, and Corporate and Financing. The Upstream segment operates to explore for and produce crude oil and natural gas. The Downstream operates to manufacture and sell petroleum products. The Chemical segment operates to manufacture and sell petrochemicals. The Company has exploration and development activities in projects located in the United States, Canada/South America, Europe, Africa, Asia and Australia/Oceania.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of XOM – November 2018

Stage 1: Is this company suitable for the Defensive Investor or the Enterprising Investor?

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $334,301,427,796 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 0.83 Fail
3. Earnings Stability Positive EPS for 10 years prior Pass
4. Dividend Record Dividend Payments for 10 years prior Pass
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end -40.71% Fail
6. Moderate PEmg Ratio PEmg < 20 19.07 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 1.71 Pass
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 0.83 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 -1.82 Fail
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Fail

 

Stage 2: Determination of Intrinsic Value

EPSmg $4.14
MG Growth Estimate -4.25%
MG Value $0.00
Opinion Overvalued
MG Grade D+
MG Value based on 3% Growth $60.04
MG Value based on 0% Growth $35.20
Market Implied Growth Rate 5.28%
Current Price $78.96
% of Intrinsic Value N/A

Exxon Mobil Corporation does not satisfy the requirements of either the Enterprising Investor or the more conservative Defensive Investor. The Defensive Investor is concerned with the low current ratio, insufficient earnings growth over the last ten years. The Enterprising Investor has concerns regarding the level of debt relative to the current assets, and the lack of earnings growth over the last five years. As a result, all value investors following the ModernGraham approach should explore other opportunities at this time or proceed cautiously with a speculative attitude.

As for a valuation, the company appears to be Overvalued after seeing its EPSmg (normalized earnings) decline from $7.98 in 2014 to an estimated $4.14 for 2018. This level of demonstrated earnings growth does not support the market’s implied estimate of 5.28% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value below the price.

At the time of valuation, further research into Exxon Mobil Corporation revealed the company was trading above its Graham Number of $67.18. The company pays a dividend of $3.06 per share, for a yield of 3.9%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 19.07, which was below the industry average of 50.98, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-24.31.

Exxon Mobil Corporation scores quite poorly in the ModernGraham grading system, with an overall grade of D+.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$24.31
Graham Number $67.18
PEmg 19.07
Current Ratio 0.83
PB Ratio 1.71
Current Dividend $3.06
Dividend Yield 3.88%
Number of Consecutive Years of Dividend Growth 15

Useful Links:

ModernGraham tagged articles Morningstar
Google Finance MSN Money
Yahoo Finance Seeking Alpha
GuruFocus SEC Filings

Most Recent Balance Sheet Figures

Balance Sheet Information 9/1/2018
Total Current Assets $53,975,000,000
Total Current Liabilities $65,288,000,000
Long-Term Debt $20,624,000,000
Total Assets $354,628,000,000
Intangible Assets $0
Total Liabilities $157,797,000,000
Shares Outstanding (Diluted Average) 4,271,000,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $4.53
Dec2017 $4.63
Dec2016 $1.88
Dec2015 $3.85
Dec2014 $7.60
Dec2013 $7.37
Dec2012 $9.70
Dec2011 $8.42
Dec2010 $6.22
Dec2009 $3.98
Dec2008 $8.66
Dec2007 $7.26
Dec2006 $6.62
Dec2005 $5.71
Dec2004 $3.89
Dec2003 $3.23
Dec2002 $1.68
Dec2001 $2.21
Dec2000 $2.52
Dec1999 $1.13
Dec1998 $1.14

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $4.14
Dec2017 $4.32
Dec2016 $4.80
Dec2015 $6.64
Dec2014 $7.98
Dec2013 $7.82
Dec2012 $7.83
Dec2011 $6.90
Dec2010 $6.28
Dec2009 $6.35
Dec2008 $7.17
Dec2007 $6.06
Dec2006 $5.05
Dec2005 $3.96
Dec2004 $2.96
Dec2003 $2.38
Dec2002 $1.88

Recommended Reading:

Other ModernGraham posts about the company

5 Overvalued Dow Components – June 2018
5 Overvalued Dow Components – February 2018
Exxon Mobil Corp Valuation – February 2018 $XOM
Most Overvalued Stocks of the S&P 500 – March 2017
5 Overvalued Dow Components – February 2017

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Disclaimer:

The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  See my current holdings here.  This article is not investment advice; any reader should speak to a registered investment adviser prior to making any investment decisions.  ModernGraham is not affiliated with the company in any manner.  Please be sure to review our detailed disclaimer.

Exxon Mobil Corp Valuation – February 2018 $XOM

Company Profile (obtained from Marketwatch): Exxon Mobil Corp. engages in the exploration, development, and distribution of oil, gas, and petroleum products. It operates through the following segments: Upstream, Downstream, and Chemical. The Upstream segment produces crude oil and natural gas. The Downstream segment manufactures and trades petroleum products. The Chemical segment offers petrochemicals. The company was founded by John D. Rockefeller in 1882 and is headquartered in Irving, TX.

XOM Chart

XOM data by YCharts

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of XOM – February 2018

Stage 1: Is this company suitable for the Defensive Investor or the Enterprising Investor?

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $328,502,862,703 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 0.85 Fail
3. Earnings Stability Positive EPS for 10 years prior Pass
4. Dividend Record Dividend Payments for 10 years prior Pass
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end -50.69% Fail
6. Moderate PEmg Ratio PEmg < 20 19.55 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 1.82 Pass
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 0.85 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 -3.10 Fail
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Fail

 

Stage 2: Determination of Intrinsic Value

EPSmg $3.97
MG Growth Estimate -4.25%
MG Value $0.00
Opinion Overvalued
MG Grade D+
MG Value based on 3% Growth $57.51
MG Value based on 0% Growth $33.71
Market Implied Growth Rate 5.52%
Current Price $77.53
% of Intrinsic Value N/A

Exxon Mobil Corporation does not satisfy the requirements of either the Enterprising Investor or the more conservative Defensive Investor. The Defensive Investor is concerned with the low current ratio, insufficient earnings growth over the last ten years. The Enterprising Investor has concerns regarding the level of debt relative to the current assets, and the lack of earnings growth over the last five years. As a result, all value investors following the ModernGraham approach should explore other opportunities at this time or proceed cautiously with a speculative attitude.

As for a valuation, the company appears to be Overvalued after seeing its EPSmg (normalized earnings) decline from $7.82 in 2013 to an estimated $3.97 for 2017. This level of demonstrated earnings growth does not support the market’s implied estimate of 5.52% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value below the price.

At the time of valuation, further research into Exxon Mobil Corporation revealed the company was trading above its Graham Number of $56.92. The company pays a dividend of $2.98 per share, for a yield of 3.8%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 19.55, which was below the industry average of 63.11, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-28.42.

Exxon Mobil Corporation scores quite poorly in the ModernGraham grading system, with an overall grade of D+.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$28.42
Graham Number $56.92
PEmg 19.55
Current Ratio 0.85
PB Ratio 1.82
Current Dividend $2.98
Dividend Yield 3.84%
Number of Consecutive Years of Dividend Growth 14

Useful Links:

ModernGraham tagged articles Morningstar
Google Finance MSN Money
Yahoo Finance Seeking Alpha
GuruFocus SEC Filings

Most Recent Balance Sheet Figures

Balance Sheet Information 9/1/2017
Total Current Assets $45,752,000,000
Total Current Liabilities $53,777,000,000
Long-Term Debt $24,869,000,000
Total Assets $349,427,000,000
Intangible Assets $0
Total Liabilities $167,151,000,000
Shares Outstanding (Diluted Average) 4,271,000,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $3.57
Dec2016 $1.88
Dec2015 $3.85
Dec2014 $7.60
Dec2013 $7.37
Dec2012 $9.70
Dec2011 $8.42
Dec2010 $6.22
Dec2009 $3.98
Dec2008 $8.66
Dec2007 $7.26
Dec2006 $6.62
Dec2005 $5.71
Dec2004 $3.89
Dec2003 $3.23
Dec2002 $1.68
Dec2001 $2.21
Dec2000 $2.52
Dec1999 $1.13
Dec1998 $1.14
Dec1997 $1.69

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $3.97
Dec2016 $4.80
Dec2015 $6.64
Dec2014 $7.98
Dec2013 $7.82
Dec2012 $7.83
Dec2011 $6.90
Dec2010 $6.28
Dec2009 $6.35
Dec2008 $7.17
Dec2007 $6.06
Dec2006 $5.05
Dec2005 $3.96
Dec2004 $2.96
Dec2003 $2.38
Dec2002 $1.88
Dec2001 $1.90

Recommended Reading:

Other ModernGraham posts about the company

Most Overvalued Stocks of the S&P 500 – March 2017
5 Overvalued Dow Components – February 2017
Exxon Mobil Corp Valuation – February 2017 $XOM
5 Overvalued Dow Components – December 2016
Exxon Mobil Corporation Valuation – August 2016 $XOM

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Disclaimer:

The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  See my current holdings here.  This article is not investment advice; any reader should speak to a registered investment adviser prior to making any investment decisions.  ModernGraham is not affiliated with the company in any manner.  Please be sure to review our detailed disclaimer.

Exxon Mobil Corp Valuation – February 2017 $XOM

Benjamin Graham taught that Intelligent Investors must do a thorough fundamental analysis of investment opportunities to determine their intrinsic value and inherent risk.  This is best done by utilizing a systematic approach to analysis that will provide investors with a sense of how a specific company compares to another company or by reviewing the 10 Stocks for Using A Benjamin Graham Value Investing Strategy – February 2017.  By using the ModernGraham method one can review a company’s historical accomplishments and determine an intrinsic value that can be compared across industries.  What follows is a stock analysis showing a specific look at how Exxon Mobil Corp (XOM) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Exxon Mobil Corporation is an energy company. The Company is engaged in the exploration and production of crude oil and natural gas, manufacturing of petroleum products, and transportation and sale of crude oil, natural gas and petroleum products. The Company also manufactures and markets petrochemicals, including olefins, aromatics, polyethylene and polypropylene plastics, and various specialty products. The Company operates through the Upstream, Downstream, Chemical, and Corporate and Financing segments. The Upstream segment operates to explore for and produce crude oil and natural gas. The Downstream segment operates to manufacture and sell petroleum products. The Chemical segment operates to manufacture and sell petrochemicals. The Company’s projects include the Kearl project, Heidelberg project, the Point Thomson project, the Hadrian South project, the Lucius project, the Barzan project, the Arkutun-Dagi project, and the Upper Zakum 750 project, among others.

XOM Chart

XOM data by YCharts

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of XOM – February 2017

Stage 1: Is this company suitable for the Defensive Investor or the Enterprising Investor?

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $334,157,922,468 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 0.86 Fail
3. Earnings Stability Positive EPS for 10 years prior Pass
4. Dividend Record Dividend Payments for 10 years prior Pass
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end -32.26% Fail
6. Moderate PEmg Ratio PEmg < 20 16.87 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 2.00 Pass
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 0.86 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 -4.09 Fail
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Fail

Stage 2: Determination of Intrinsic Value

EPSmg $4.85
MG Growth Estimate -4.25%
MG Value $0.00
Opinion Overvalued
MG Grade D+
MG Value based on 3% Growth $70.36
MG Value based on 0% Growth $41.25
Market Implied Growth Rate 4.18%
Current Price $81.86
% of Intrinsic Value N/A

Exxon Mobil Corporation does not satisfy the requirements of either the Enterprising Investor or the more conservative Defensive Investor. The Defensive Investor is concerned with the low current ratio, insufficient earnings growth over the last ten years. The Enterprising Investor has concerns regarding the level of debt relative to the current assets, and the lack of earnings growth over the last five years. As a result, all value investors following the ModernGraham approach should explore other opportunities at this time or proceed cautiously with a speculative attitude.

As for a valuation, the company appears to be Overvalued after seeing its EPSmg (normalized earnings) decline from $7.83 in 2012 to an estimated $4.85 for 2016. This level of demonstrated earnings growth does not support the market’s implied estimate of 4.18% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value below the price.

At the time of valuation, further research into Exxon Mobil Corporation revealed the company was trading above its Graham Number of $43.35. The company pays a dividend of $2.96 per share, for a yield of 3.6%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 16.87, which was below the industry average of 69.19, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-30.12.

Exxon Mobil Corporation scores quite poorly in the ModernGraham grading system, with an overall grade of D+.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$30.12
Graham Number $43.35
PEmg 16.87
Current Ratio 0.86
PB Ratio 2.00
Current Dividend $2.96
Dividend Yield 3.62%
Number of Consecutive Years of Dividend Growth 14

Useful Links:

ModernGraham tagged articles Morningstar
Google Finance MSN Money
Yahoo Finance Seeking Alpha
GuruFocus SEC Filings

Most Recent Balance Sheet Figures

Balance Sheet Information 9/1/2016
Total Current Assets $42,945,000,000
Total Current Liabilities $50,021,000,000
Long-Term Debt $28,916,000,000
Total Assets $339,386,000,000
Intangible Assets $0
Total Liabilities $168,789,000,000
Shares Outstanding (Diluted Average) 4,178,000,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $2.03
Dec2015 $3.85
Dec2014 $7.60
Dec2013 $7.37
Dec2012 $9.70
Dec2011 $8.42
Dec2010 $6.22
Dec2009 $3.98
Dec2008 $8.66
Dec2007 $7.26
Dec2006 $6.62
Dec2005 $5.71
Dec2004 $3.89
Dec2003 $3.23
Dec2002 $1.68
Dec2001 $2.21
Dec2000 $2.52
Dec1999 $1.13
Dec1998 $1.14
Dec1997 $1.69
Dec1996 $1.51

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $4.85
Dec2015 $6.64
Dec2014 $7.98
Dec2013 $7.82
Dec2012 $7.83
Dec2011 $6.90
Dec2010 $6.28
Dec2009 $6.35
Dec2008 $7.17
Dec2007 $6.06
Dec2006 $5.05
Dec2005 $3.96
Dec2004 $2.96
Dec2003 $2.38
Dec2002 $1.88
Dec2001 $1.90
Dec2000 $1.69

Recommended Reading:

Other ModernGraham posts about the company

Exxon Mobil Corporation Analysis – 2015 Annual Update $XOM
20 Companies in the Research Spotlight This Week – June 7, 2014
Exxon Mobil Corp 2014 Annual Valuation $XOM
16 Companies in the Spotlight This Week – 3/8/14
Exxon Mobil Corporation (XOM) Quarterly Valuation

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Disclaimer:

The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  See my current holdings here.  This article is not investment advice; any reader should speak to a registered investment adviser prior to making any investment decisions.  ModernGraham is not affiliated with the company in any manner.  Please be sure to review our detailed disclaimer.

Exxon Mobil Corporation Valuation – August 2016 $XOM

Benjamin Graham taught that Intelligent Investors must do a thorough fundamental analysis of investment opportunities to determine their intrinsic value and inherent risk.  This is best done by utilizing a systematic approach to analysis that will provide investors with a sense of how a specific company compares to another company or by reviewing the 10 Companies Benjamin Graham Would Invest In Today – July 2016.  By using the ModernGraham method one can review a company’s historical accomplishments and determine an intrinsic value that can be compared across industries.  What follows is a stock analysis showing a specific look at how Exxon Mobil Corporation (XOM) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Exxon Mobil Corporation is an energy company. The Company is engaged in the exploration and production of crude oil and natural gas, manufacturing of petroleum products, and transportation and sale of crude oil, natural gas and petroleum products. The Company also manufactures and markets petrochemicals, including olefins, aromatics, polyethylene and polypropylene plastics, and various specialty products. The Company operates through the Upstream, Downstream, Chemical, and Corporate and Financing segments. The Upstream segment operates to explore for and produce crude oil and natural gas. The Downstream segment operates to manufacture and sell petroleum products. The Chemical segment operates to manufacture and sell petrochemicals. The Company’s projects include the Kearl project, Heidelberg project, the Point Thomson project, the Hadrian South project, the Lucius project, the Barzan project, the Arkutun-Dagi project, and the Upper Zakum 750 project, among others.

chart (72)

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of XOM – August 2016

Stage 1: Is this company suitable for the Defensive Investor or the Enterprising Investor?

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $369,475,369,935 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 0.89 Fail
3. Earnings Stability Positive EPS for 10 years prior Pass
4. Dividend Record Dividend Payments for 10 years prior Pass
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end -33.07% Fail
6. Moderate PEmg Ratio PEmg < 20 18.53 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 2.18 Pass
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 0.89 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 -5.20 Fail
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Fail

Stage 2: Determination of Intrinsic Value

XOM value chart August 2016

EPSmg $4.80
MG Growth Estimate -4.25%
MG Value $0.00
Opinion Overvalued
MG Grade C
MG Value based on 3% Growth $69.59
MG Value based on 0% Growth $40.79
Market Implied Growth Rate 5.01%
Current Price $88.91
% of Intrinsic Value N/A

Exxon Mobil Corporation does not satisfy the requirements of either the Enterprising Investor or the more conservative Defensive Investor. The Defensive Investor is concerned with the low current ratio, insufficient earnings growth over the last ten years. The Enterprising Investor has concerns regarding the level of debt relative to the current assets, and the lack of earnings growth over the last five years. As a result, all value investors following the ModernGraham approach should explore other opportunities at this time or proceed cautiously with a speculative attitude.

As for a valuation, the company appears to be Overvalued after seeing its EPSmg (normalized earnings) decline from $7.83 in 2012 to an estimated $4.8 for 2016. This level of demonstrated earnings growth does not support the market’s implied estimate of 5.01% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value below the price.

At the time of valuation, further research into Exxon Mobil Corporation revealed the company was trading above its Graham Number of $41.6. The company pays a dividend of $2.94 per share, for a yield of 3.3%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 18.53, which was below the industry average of 55.24, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-30.17.

Exxon Mobil Corporation receives an average overall rating in the ModernGraham grading system, scoring a C.

Stage 3: Information for Further Research

XOM charts August 2016

Net Current Asset Value (NCAV) -$30.17
Graham Number $41.60
PEmg 18.53
Current Ratio 0.89
PB Ratio 2.18
Current Dividend $2.94
Dividend Yield 3.31%
Number of Consecutive Years of Dividend Growth 20

Useful Links:

ModernGraham tagged articles Morningstar
Google Finance MSN Money
Yahoo Finance Seeking Alpha
GuruFocus SEC Filings

Most Recent Balance Sheet Figures

Balance Sheet Information 6/1/2016
Total Current Assets $45,828,000,000
Total Current Liabilities $51,504,000,000
Long-Term Debt $29,499,000,000
Total Assets $342,473,000,000
Intangible Assets $0
Total Liabilities $171,882,000,000
Shares Outstanding (Diluted Average) 4,178,000,000

Earnings Per Share History

Next Fiscal Year Estimate $1.87
Dec2015 $3.85
Dec2014 $7.60
Dec2013 $7.37
Dec2012 $9.70
Dec2011 $8.42
Dec2010 $6.22
Dec2009 $3.98
Dec2008 $8.66
Dec2007 $7.26
Dec2006 $6.62
Dec2005 $5.71
Dec2004 $3.89
Dec2003 $3.23
Dec2002 $1.68
Dec2001 $2.21
Dec2000 $2.52
Dec1999 $1.13
Dec1998 $1.14
Dec1997 $1.69
Dec1996 $1.51

Earnings Per Share – ModernGraham History

Next Fiscal Year Estimate $4.80
Dec2015 $6.64
Dec2014 $7.98
Dec2013 $7.82
Dec2012 $7.83
Dec2011 $6.90
Dec2010 $6.28
Dec2009 $6.35
Dec2008 $7.17
Dec2007 $6.06
Dec2006 $5.05
Dec2005 $3.96
Dec2004 $2.96
Dec2003 $2.38
Dec2002 $1.88
Dec2001 $1.90
Dec2000 $1.69

Recommended Reading:

Other ModernGraham posts about the company

Exxon Mobil Corporation Analysis – 2015 Annual Update $XOM
20 Companies in the Research Spotlight This Week – June 7, 2014
Exxon Mobil Corp 2014 Annual Valuation $XOM
16 Companies in the Spotlight This Week – 3/8/14
Exxon Mobil Corporation (XOM) Quarterly Valuation

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Rowan Companies PLC Valuation – July 2016 $RDC
ConocoPhillips Valuation – July 2016 $COP
Devon Energy Corp Valuation – July 2016 $DVN
Noble Energy Inc Valuation – July 2016 $NBL
Diamond Offshore Drilling Inc Valuation – July 2016 $DO

Disclaimer:

The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  See my current holdings here.  This article is not investment advice; any reader should speak to a registered investment adviser prior to making any investment decisions.  ModernGraham is not affiliated with the company in any manner.  Please be sure to review our detailed disclaimer.

Exxon Mobil Corporation Analysis – 2015 Annual Update $XOM

500px-Exxon_Mobil_Logo.svgBenjamin Graham taught that Intelligent Investors must do a thorough fundamental analysis of investment opportunities to determine their intrinsic value and inherent risk.  This is best done by utilizing a systematic approach to analysis that will provide investors with a sense of how a specific company compares to another company or by reviewing the 5 Most Undervalued Companies for the Defensive Investor – May 2015.  By using the ModernGraham method one can review a company’s historical accomplishments and determine an intrinsic value that can be compared across industries.  What follows is a stock analysis showing a specific look at how Exxon Mobil Corporation (XOM) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Exxon Mobil Corporation (ExxonMobil) is a manufacturer and marketer of commodity petrochemicals, including olefins, aromatics, polyethylene and polypropylene plastics and a wide variety of specialty products. The Company engages in energy, involving exploration for, and production of, crude oil and natural gas, manufacture of petroleum products and transportation and sale of crude oil, natural gas and petroleum products. ExxonMobil has interests in electric power generation facilities. The Company has divisions and affiliates including ExxonMobil, Exxon, Esso, Mobil or XTO. The Company’s ongoing activities are in United States, Canada / South America, Europe, Africa, Asia and Australia / Oceania.

Defensive Investor – must pass at least 6 of the following 7 tests: Score = 5/7

  1. Adequate Size of Enterprise – market capitalization of at least $2 billion – PASS
  2. Sufficiently Strong Financial Condition – current ratio greater than 2 – FAIL
  3. Earnings Stability – positive earnings per share for at least 10 straight years – PASS
  4. Dividend Record – has paid a dividend for at least 10 straight years – PASS
  5. Earnings Growth – earnings per share has increased by at least 1/3 over the last 10 years using 3 year averages at beginning and end of period – FAIL
  6. Moderate PEmg ratio – PEmg is less than 20 – PASS
  7. Moderate Price to Assets – PB ratio is less than 2.5 or PB x PEmg is less than 50 – PASS

Enterprising Investor – must pass at least 4 of the following 5 tests or be suitable for a defensive investor: Score = 2/5

  1. Sufficiently Strong Financial Condition, Part 1 – current ratio greater than 1.5 – FAIL
  2. Sufficiently Strong Financial Condition, Part 2 – Debt to Net Current Assets ratio less than 1.1 – FAIL
  3. Earnings Stability – positive earnings per share for at least 5 years – PASS
  4. Dividend Record – currently pays a dividend – PASS
  5. Earnings growth – EPSmg greater than 5 years ago – FAIL

Valuation Summary

Key Data:

Recent Price $84.24
MG Value $42.51
MG Opinion Overvalued
Value Based on 3% Growth $93.65
Value Based on 0% Growth $54.90
Market Implied Growth Rate 2.27%
Net Current Asset Value (NCAV) -$28.75
PEmg 13.04
Current Ratio 0.91
PB Ratio 2.07

Balance Sheet – March 2015

Current Assets $50,658,000,000
Current Liabilities $55,933,000,000
Total Debt $19,494,000,000
Total Assets $342,961,000,000
Intangible Assets $8,335,000,000
Total Liabilities $171,734,000,000
Outstanding Shares 4,211,000,000

Earnings Per Share

2015 (estimate) $3.31
2014 $7.60
2013 $7.37
2012 $9.70
2011 $8.42
2010 $6.22
2009 $3.98
2008 $8.66
2007 $7.26
2006 $6.62
2005 $5.71

Earnings Per Share – ModernGraham

2015 (estimate) $6.46
2014 $7.98
2013 $7.82
2012 $7.83
2011 $6.90
2010 $6.28

Dividend History

Conclusion:

As this stock analysis shows, Exxon Mobil Corporation is not suitable for either the Defensive Investor or the Enterprising Investor.  The Defensive Investor is concerned with the low current ratio, and the insufficient earnings growth over the last ten years.  The Enterprising Investor is concerned with the level of debt relative to the current assets, and the lack of earnings growth over the last five years.  As a result, value investors following the ModernGraham approach based on Benjamin Graham’s methods should explore other opportunities.  As for a valuation, the company appears to be overvalued after seeing its EPSmg (normalized earnings) drop from $6.90 in 2011 to only an estimated $6.46 for 2015.  This level of demonstrated earnings growth does not support the market’s implied estimate of 2.27% annual earnings growth over the next 7-10 years.  As a result, the ModernGraham valuation model, based on Benjamin Graham’s formula, returns an estimate of intrinsic value well below the price.

The next part of the analysis is up to individual investors, and requires discussion of the company’s prospects.  What do you think?  What value would you put on Exxon Mobil Corporation (XOM)?  Where do you see the company going in the future?  Is there a company you like better?  Leave a comment on our Facebook page or mention @ModernGraham on Twitter to discuss.

Disclaimer:  The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  Logo taken from Wikipedia for the sole purpose of identifying the company; this article is not affiliated with the company in any manner.

Exxon Mobil Corp 2014 Annual Valuation $XOM

500px-Exxon_Mobil_Logo.svgBenjamin Graham taught that Intelligent Investors must do a thorough fundamental analysis of investment opportunities to determine their intrinsic value and inherent risk.  This is best done by utilizing a systematic approach to analysis that will provide investors with a sense of how a specific company compares to another company or by reviewing the 5 Undervalued Companies with a Low Beta.  By using the ModernGraham method one can review a company’s historical accomplishments and determine an intrinsic value that can be compared across industries.  What follows is a specific look at how Exxon Mobil Corp (XOM) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Exxon Mobil Corporation is a manufacturer and marketer of commodity petrochemicals, including olefins, aromatics, polyethylene and polypropylene plastics and a range of specialty products. The Company has a number of divisions and affiliates with names that include ExxonMobil, Exxon, Esso or Mobil. Divisions and affiliated companies of the Company operate or market products in the United States and other countries of the world. Their principal business is energy, involving exploration for, and production of, crude oil and natural gas, manufacture of petroleum products and transportation and sale of crude oil, natural gas and petroleum products. In January 2012, Apache Corporation acquired its Mobil North Sea Limited assets, including the Beryl field and related properties. In April 2013, BNK Petroleum (US) Inc. sold Tishomingo Field, Oklahoma assets other than the Caney and upper Sycamore formations to XTO Energy Inc., a subsidiary of Exxon Mobil Corporation.

XOM Chart

XOM data by YCharts

Defensive Investor – must pass at least 6 of the following 7 tests: Score = 5/7

  1. Adequate Size of Enterprise – market capitalization of at least $2 billion – PASS
  2. Sufficiently Strong Financial Condition – current ratio greater than 2 – FAIL
  3. Earnings Stability – positive earnings per share for at least 10 straight years – PASS
  4. Dividend Record – has paid a dividend for at least 10 straight years – PASS
  5. Earnings Growth – earnings per share has increased by at least 1/3 over the last 10 years using 3 year averages at beginning and end of period – FAIL
  6. Moderate PEmg ratio – PEmg is less than 20 – PASS
  7. Moderate Price to Assets – PB ratio is less than 2.5 or PB x PEmg is less than 50 – PASS

Enterprising Investor – must pass at least 4 of the following 5 tests or be suitable for a defensive investor: Score = 3/5

  1. Sufficiently Strong Financial Condition, Part 1 – current ratio greater than 1.5 – FAIL
  2. Sufficiently Strong Financial Condition, Part 2 – Debt to Net Current Assets ratio less than 1.1 – FAIL
  3. Earnings Stability – positive earnings per share for at least 5 years – PASS
  4. Dividend Record – currently pays a dividend – PASS
  5. Earnings growth – EPSmg greater than 5 years ago – PASS

Valuation Summary

Key Data:

Recent Price $99.94
MG Value $125.80
MG Opinion Fairly Valued
Value Based on 3% Growth $114.20
Value Based on 0% Growth $66.95
Market Implied Growth Rate 2.09%
Net Current Asset Value (NCAV) -$26.73
PEmg 12.69
Current Ratio 0.88
PB Ratio 2.43

Balance Sheet – 3/31/2014

Current Assets $61,864,000,000
Current Liabilities $70,108,000,000
Total Debt $12,144,000,000
Total Assets $353,033,000,000
Intangible Assets $8,103,000,000
Total Liabilities $176,635,000,000
Outstanding Shares 4,294,000,000

Earnings Per Share

2014 (estimate) $7.30
2013 $7.37
2012 $9.70
2011 $8.42
2010 $6.22
2009 $3.99
2008 $8.78
2007 $7.28
2006 $6.62
2005 $5.71
2004 $3.89

Earnings Per Share – ModernGraham

2014 (estimate) $7.88
2013 $7.82
2012 $7.84
2011 $6.92
2010 $6.31
2009 $6.39

Dividend History

XOM Dividend Chart

XOM Dividend data by YCharts

Conclusion:

Exxon Mobil is no longer suitable for the Defensive Investor or the Enterprising Investor.  The Defensive Investor now has concerns with the poor current ratio and the lack of sufficient earnings growth over the last ten years.  The Enterprising Investor has significant concerns with the level of debt relative to current assets.  As a result, value investors following the ModernGraham approach based on Benjamin Graham’s methods should explore other opportunities through a review of ModernGraham’s valuation of Chevron Corp (CVX).  From a valuation side of things, the company appears to be fairly valued after growing its EPSmg (normalized earnings) from $6.31 in 2010 to an estimated $7.88 for 2014.  This level of demonstrated growth supports the market’s implied estimate of 2.09% earnings growth and leads the ModernGraham valuation model to return an estimate of intrinsic value that falls within a margin of safety relative to the price.

The next part of the analysis is up to individual investors, and requires discussion of the company’s prospects.  What do you think?  What value would you put on General Electric (GE)?  Where do you see the company going in the future?  Is there a company you like better?  Leave a comment on our Facebook page or mention @ModernGraham on Twitter to discuss.

Be sure to review the previous ModernGraham Valuations of Exxon Mobil Corp (XOM)!

Disclaimer:  The author did not hold a position in Exxon Mobil Corp (XOM) or any other company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.

Logo taken from wikipedia; this article is not affiliated with the company in any manner.

Exxon Mobil Corporation (XOM) Quarterly Valuation

500px-Exxon_Mobil_Logo.svgBenjamin Graham taught that Intelligent Investors must do a thorough fundamental analysis of investment opportunities to determine their intrinsic value and inherent risk.  This is best done by utilizing a systematic approach to analysis that will provide investors with a sense of how a specific company compares to another company.  By using the ModernGraham method one can review a company’s historical accomplishments and determine an intrinsic value that can be compared across industries.  What follows is a specific look at how Exxon Mobil Corporation fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Exxon Mobil Corporation is a manufacturer and marketer of commodity petrochemicals, including olefins, aromatics, polyethylene and polypropylene plastics and a range of specialty products. The Company has a number of divisions and affiliates with names that include ExxonMobil, Exxon, Esso or Mobil. Divisions and affiliated companies of the Company operate or market products in the United States and other countries of the world. Their principal business is energy, involving exploration for, and production of, crude oil and natural gas, manufacture of petroleum products and transportation and sale of crude oil, natural gas and petroleum products. In January 2012, Apache Corporation acquired its Mobil North Sea Limited assets, including the Beryl field and related properties. In April 2013, BNK Petroleum (US) Inc. sold Tishomingo Field, Oklahoma assets other than the Caney and upper Sycamore formations to XTO Energy Inc., a subsidiary of Exxon Mobil Corporation.

XOM Chart

XOM data by YCharts

Defensive Investor – must pass at least 6 of the following 7 tests: Score = 6/7

  1. Adequate Size of Enterprise – market capitalization of at least $2 billion – PASS
  2. Sufficiently Strong Financial Condition – current ratio greater than 2 – FAIL
  3. Earnings Stability – positive earnings per share for at least 10 straight years – PASS
  4. Dividend Record – has paid a dividend for at least 10 straight years – PASS
  5. Earnings Growth – earnings per share has increased by at least 1/3 over the last 10 years using 3 year averages at beginning and end of period – PASS
  6. Moderate PEmg ratio – PEmg is less than 20 – PASS
  7. Moderate Price to Assets – PB ratio is less than 2.5 or PB x PEmg is less than 50 – PASS

Enterprising Investor – must pass at least 4 of the following 5 tests or be suitable for a defensive investor: Score = 3/5

  1. Sufficiently Strong Financial Condition, Part 1 – current ratio greater than 1.5 – FAIL
  2. Sufficiently Strong Financial Condition, Part 2 – Debt to Net Current Assets ratio less than 1.1 – FAIL
  3. Earnings Stability – positive earnings per share for at least 5 years – PASS
  4. Dividend Record – currently pays a dividend – PASS
  5. Earnings growth – EPSmg greater than 5 years ago – PASS

Valuation Summary

Key Data:

Recent Price $96.27
MG Value $119.08
MG Opinion Fairly Valued
Value Based on 3% Growth $113.43
Value Based on 0% Growth $66.49
Market Implied Growth Rate 1.90%
Net Current Asset Value (NCAV) -$26.18
PEmg 12.31
Current Ratio 0.83
PB Ratio 2.40

Balance Sheet – 12/31/2013

Current Assets $59,308,000,000
Current Liabilities $71,724,000,000
Total Debt $6,891,000,000
Total Assets $346,808,000,000
Intangible Assets $7,522,000,000
Total Liabilities $172,805,000,000
Outstanding Shares 4,335,000,000

Earnings Per Share

2013 $7.37
2012 $9.70
2011 $8.42
2010 $6.22
2009 $3.99
2008 $8.78
2007 $7.28
2006 $6.62
2005 $5.71
2004 $3.89
2003 $3.15
2002 $1.62

Earnings Per Share – ModernGraham 

2013 $7.82
2012 $7.84
2011 $6.92
2010 $6.31
2009 $6.39
2008 $7.21

Dividend History

XOM Dividend Chart

XOM Dividend data by YCharts

Conclusion:

Exxon Mobil Corporation is suitable for the Defensive Investor after having passed every one of the investor type’s requirements except for the current ratio.  The company is then also suitable for the Enterprising Investor by default, despite having a high level of debt relative to the company’s current assets.  As a result, value investors seeking to follow the ModernGraham approach based on Benjamin Graham’s methods should feel comfortable proceeding with further research into the company and the potential investment opportunity.  This research should also include a review of ModernGraham’s valuation of Chevron Corporation (CVX) and a list of 5 Undervalued Companies for the Defensive Investor.  From a valuation perspective, the company appears to be fairly valued after growing its EPSmg (normalized earnings) from $6.39 in 2009 to $7.82 for 2013.  This level of growth supports the market’s current implied estimate of earnings growth of 1.9%, leading the ModernGraham valuation model to return an estimate of intrinsic value that falls within a margin of safety when compared to the current price.

The next part of the analysis is up to individual investors, and requires discussion of the company’s prospects.  What do you think?  What value would you put on Exxon Mobil (XOM)?  Where do you see the company going in the future?  Is there a company you like better?  Leave a comment on our Facebook page or mention @ModernGraham on Twitter to discuss.

If you like our valuations, why not check out ModernGraham Stocks & Screens?  It’s a great way to review the valuations while screening for things like low PE ratio, undervalued companies, etc.!

Disclaimer:  The author did not hold a position in Exxon Mobil (XOM) or any of the other companies listed in this article at the time of publication and had no intention of changing that position within the next 72 hours.

Logo taken from the Wikipedia; this article is not affiliated with the company in any manner.

ModernGraham Valuation: Exxon Mobil (XOM)

money

Company Profile (obtained from Google Finance): Exxon Mobil Corporation (Exxon Mobil) is a manufacturer and marketer of commodity petrochemicals, including olefins, aromatics, polyethylene and polypropylene plastics and a range of specialty products. The Company has a number of divisions and affiliates with names that include ExxonMobil, Exxon, Esso or Mobil. Divisions and affiliated companies of ExxonMobil operate or market products in the United States and other countries of the world. Their principal business is energy, involving exploration for, and production of, crude oil and natural gas, manufacture of petroleum products and transportation and sale of crude oil, natural gas and petroleum products. In January 2012, Apache Corporation acquired Exxon Mobil’s Mobil North Sea Limited assets including the Beryl field and related properties. In April 2013, BNK Petroleum (US) Inc. sold Tishomingo Field, Oklahoma assets other than the Caney and upper Sycamore formations to XTO Energy Inc., a subsidiary of Exxon Mobil Corporation.

Defensive and Enterprising Investor Tests (What is the significance of these tests, and what is PEmg ratio?):

Defensive Investor – must pass at least 6 of the following 7 tests: Score = 6/7

  1. Adequate Size of Enterprise – market capitalization of at least $2 billion – PASS
  2. Sufficiently Strong Financial Condition – current ratio greater than 2 – FAIL
  3. Earnings Stability – positive earnings per share for at least 10 straight years – PASS
  4. Dividend Record – has paid a dividend for at least 10 straight years – PASS
  5. Earnings Growth – earnings per share has increased by at least 1/3 over the last 10 years using 3 year averages at beginning and end of period – PASS
  6. Moderate PEmg ratio – PEmg is less than 20 – PASS
  7. Moderate Price to Assets – PB ratio is less than 2.5 or PB x PEmg is less than 50 – PASS

Enterprising Investor – must pass at least 4 of the following 5 tests or be suitable for a defensive investor: Score = 4/5

  1. Sufficiently Strong Financial Condition, Part 1 – current ratio greater than 1.5 – FAIL
  2. Sufficiently Strong Financial Condition, Part 2 – Debt to Net Current Assets ratio less than 1.1 – PASS
  3. Earnings Stability – positive earnings per share for at least 5 years – PASS
  4. Dividend Record – currently pays a dividend – PASS
  5. Earnings growth – EPSmg greater than 5 years ago – PASS

Valuation Summary (explanation of the ModernGraham valuation model):

MG Value $128
MG Opinion Undervalued
Value Based on 3% Growth $116
Value Based on 0% Growth $68
Market Implied Growth Rate 1.49%
Net Current Asset Value (NCAV) -$25.70
PEmg 11.49
Current Ratio 0.86
PB Ratio 2.45

Key Data:

Balance Sheet – 9/30/2013 (an Introduction to the Balance Sheet)

Current Assets $62,844,000,000
Current Liabilities $72,688,000,000
Total Debt $7,496,000,000
Total Assets $341,615,000,000
Intangible Assets $7,888,000,000
Total Liabilities $175,968,000,000
Outstanding Shares 4,402,000,000

Earnings Per Share – Diluted

2013 (estimate) $7.24
2012 $10.30
2011 $8.66
2010 $6.41
2009 $4.07
2008 $8.78
2007 $7.28
2006 $6.62
2005 $5.71
2004 $3.89
2003 $3.15
2002 $1.62

Earnings Per Share – Modern Graham

2013 (estimate) $8.02
2012 $8.15
2011 $7.07
2010 $6.39
2009 $6.42
2008 $7.21

Conclusion:

Exxon Mobil is a very attractive company at its current price, and has strong financials that pass the tests for both the defensive and enterprising investor.  The company’s earnings growth has been a little uneven from year to year, but the normalized earnings definitely are showing growth.  As a result, the ModernGraham valuation model indicates the company may be slightly undervalued.  Investors should take the time to look further at Exxon Mobil to determine if it fits the needs of individual portfolios, but overall it appears there is an opportunity here.

What do you think?  Is Exxon Mobil undervalued or does Mr. Market have it right?

Disclaimer:  The author did not hold a position in Exxon Mobil at the time of publication, and had no intention of purchasing a stake in the next 72 hours.

Photo Credit:  Andrew Magill

5 Overvalued Dow Components – April 2019

There are so many great companies in the market today, but there are also many overvalued companies. By using the ModernGraham Valuation Model, I’ve selected five overvalued Dow Components reviewed by ModernGraham according to the ModernGraham approach.

Defensive Investors are defined as investors who need to select only the companies that present the least amount of risk. Enterprising Investors, on the other hand, are able to select companies that present a moderate (though still low) amount of risk. Each company suitable for the Defensive Investor is also suitable for Enterprising Investors.  Only speculators should pursue companies not suitable for either the Defensive Investor or the Enterprising Investor.

Chevron Corp (CVX)

Chevron Corporation does not satisfy the requirements of either the Enterprising Investor or the more conservative Defensive Investor. The Defensive Investor is concerned with the low current ratio, insufficient earnings stability or growth over the last ten years, and the high PEmg ratio. The Enterprising Investor has concerns regarding the level of debt relative to the current assets, and the lack of earnings stability or growth over the last five years. As a result, all value investors following the ModernGraham approach should explore other opportunities at this time or proceed cautiously with a speculative attitude.

As for a valuation, the company appears to be Overvalued after seeing its EPSmg (normalized earnings) decline from $11.43 in 2014 to an estimated $5.06 for 2018. This level of demonstrated earnings growth does not support the market’s implied estimate of 7.57% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value below the price.

At the time of valuation, further research into Chevron Corporation revealed the company was trading below its Graham Number of $121.52. The company pays a dividend of $4.32 per share, for a yield of 3.6%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 23.64, which was below the industry average of 60.49, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-34.6.

Chevron Corporation performs fairly well in the ModernGraham grading system, scoring a B-.  (Read the full valuation)

Exxon Mobil Corp (XOM)

Exxon Mobil Corporation does not satisfy the requirements of either the Enterprising Investor or the more conservative Defensive Investor. The Defensive Investor is concerned with the low current ratio, insufficient earnings growth over the last ten years. The Enterprising Investor has concerns regarding the level of debt relative to the current assets, and the lack of earnings growth over the last five years. As a result, all value investors following the ModernGraham approach should explore other opportunities at this time or proceed cautiously with a speculative attitude.

As for a valuation, the company appears to be Overvalued after seeing its EPSmg (normalized earnings) decline from $7.98 in 2014 to an estimated $4.14 for 2018. This level of demonstrated earnings growth does not support the market’s implied estimate of 5.28% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value below the price.

At the time of valuation, further research into Exxon Mobil Corporation revealed the company was trading above its Graham Number of $67.18. The company pays a dividend of $3.06 per share, for a yield of 3.9%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 19.07, which was below the industry average of 50.98, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-24.31.

Exxon Mobil Corporation scores quite poorly in the ModernGraham grading system, with an overall grade of D+.  (Read the full valuation)

The Coca-Cola Company (KO)

The Coca-Cola Co does not satisfy the requirements of either the Enterprising Investor or the more conservative Defensive Investor. The Defensive Investor is concerned with the low current ratio, insufficient earnings growth over the last ten years, and the high PEmg and PB ratios. The Enterprising Investor has concerns regarding the level of debt relative to the current assets, and the lack of earnings growth over the last five years. As a result, all value investors following the ModernGraham approach should explore other opportunities at this time or proceed cautiously with a speculative attitude.

As for a valuation, the company appears to be Overvalued after seeing its EPSmg (normalized earnings) decline from $1.85 in 2014 to an estimated $1.36 for 2018. This level of demonstrated earnings growth does not support the market’s implied estimate of 14.04% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value below the price.

At the time of valuation, further research into The Coca-Cola Co revealed the company was trading above its Graham Number of $13.29. The company pays a dividend of $1.48 per share, for a yield of 3%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 36.58, which was above the industry average of 25.8. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-7.75.

The Coca-Cola Co receives an average overall rating in the ModernGraham grading system, scoring a C-.  (Read the full valuation)

Merck & Co (MRK)

Merck & Co., Inc. does not satisfy the requirements of either the Enterprising Investor or the more conservative Defensive Investor. The Defensive Investor is concerned with the low current ratio, insufficient earnings growth over the last ten years, and the high PEmg and PB ratios. The Enterprising Investor has concerns regarding the level of debt relative to the current assets, and the lack of earnings growth over the last five years. As a result, all value investors following the ModernGraham approach should explore other opportunities at this time or proceed cautiously with a speculative attitude.

As for a valuation, the company appears to be Overvalued after seeing its EPSmg (normalized earnings) decline from $2.44 in 2014 to an estimated $1.86 for 2018. This level of demonstrated earnings growth does not support the market’s implied estimate of 16.16% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value below the price.

At the time of valuation, further research into Merck & Co., Inc. revealed the company was trading above its Graham Number of $27.34. The company pays a dividend of $1.89 per share, for a yield of 2.5%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 40.82, which was above the industry average of 36.89. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-9.57.

Merck & Co., Inc. scores quite poorly in the ModernGraham grading system, with an overall grade of D.  (Read the full valuation)

Caterpillar Inc. (CAT)

Caterpillar Inc. does not satisfy the requirements of either the Enterprising Investor or the more conservative Defensive Investor. The Defensive Investor is concerned with the low current ratio, insufficient earnings stability or growth over the last ten years, and the high PEmg and PB ratios. The Enterprising Investor has concerns regarding the level of debt relative to the current assets, and the lack of earnings stability or growth over the last five years. As a result, all value investors following the ModernGraham approach should explore other opportunities at this time or proceed cautiously with a speculative attitude.

As for a valuation, the company appears to be Overvalued after seeing its EPSmg (normalized earnings) decline from $5.79 in 2014 to an estimated $4.86 for 2018. This level of demonstrated earnings growth does not support the market’s implied estimate of 8.81% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value below the price.

At the time of valuation, further research into Caterpillar Inc. revealed the company was trading above its Graham Number of $75.93. The company pays a dividend of $3.1 per share, for a yield of 2.4%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 26.12, which was below the industry average of 31.29, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-39.81.

Caterpillar Inc. scores quite poorly in the ModernGraham grading system, with an overall grade of D+.  (Read the full valuation)

Disclaimer:

The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  See my current holdings here.  This article is not investment advice; any reader should speak to a registered investment adviser prior to making any investment decisions.  ModernGraham is not affiliated with the company in any manner.  Please be sure to review our detailed disclaimer.

Devon Energy Corp Valuation – January 2019 $DVN

Company Profile (excerpt from Reuters): Devon Energy Corporation, incorporated on May 18, 1999, is an independent energy company. The Company’s segments include U.S. and Canada. The Company’s U.S. and Canada segments are primarily engaged in oil and gas exploration and production activities. The Company is engaged primarily in the exploration, development and production of oil, natural gas and natural gas liquids (NGLs). The Company’s operations are concentrated in various North American onshore areas in the United States and Canada.

DVN Chart

DVN data by YCharts

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of DVN – January 2019

Stage 1: Is this company suitable for the Defensive Investor or the Enterprising Investor?

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $12,435,391,749 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.48 Fail
3. Earnings Stability Positive EPS for 10 years prior Fail
4. Dividend Record Dividend Payments for 10 years prior Pass
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end -77.66% Fail
6. Moderate PEmg Ratio PEmg < 20 -10.16 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 1.46 Fail
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 1.48 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 3.78 Fail
3. Earnings Stability Positive EPS for 5 years prior Fail
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Fail

 

Stage 2: Determination of Intrinsic Value

EPSmg -$2.61
MG Growth Estimate -4.25%
MG Value $0.00
Opinion Overvalued
MG Grade C-
MG Value based on 3% Growth -$37.89
MG Value based on 0% Growth -$22.21
Market Implied Growth Rate -9.33%
Current Price $26.56
% of Intrinsic Value N/A

Devon Energy Corp does not satisfy the requirements of either the Enterprising Investor or the more conservative Defensive Investor. The Defensive Investor is concerned with the low current ratio, insufficient earnings stability or growth over the last ten years, and the high PEmg and PB ratios. The Enterprising Investor has concerns regarding the level of debt relative to the current assets, and the lack of earnings stability or growth over the last five years. As a result, all value investors following the ModernGraham approach should explore other opportunities at this time or proceed cautiously with a speculative attitude.

As for a valuation, the company appears to be Overvalued after seeing its EPSmg (normalized earnings) decline from $3.37 in 2014 to an estimated $-2.61 for 2018. This level of negative earnings does not support a positive valuation.As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value below the price.

At the time of valuation, further research into Devon Energy Corp revealed the company was trading below its Graham Number of $39.63. The company pays a dividend of $0.24 per share, for a yield of 0.9% Its PEmg (price over earnings per share – ModernGraham) was -10.16, which was below the industry average of 41.28, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-13.33.

Devon Energy Corp receives an average overall rating in the ModernGraham grading system, scoring a C-.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$13.33
Graham Number $39.63
PEmg -10.16
Current Ratio 1.48
PB Ratio 1.46
Current Dividend $0.24
Dividend Yield 0.90%
Number of Consecutive Years of Dividend Growth 0

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Most Recent Balance Sheet Figures

Balance Sheet Information 9/1/2018
Total Current Assets $4,757,000,000
Total Current Liabilities $3,224,000,000
Long-Term Debt $5,791,000,000
Total Assets $20,172,000,000
Intangible Assets $841,000,000
Total Liabilities $11,274,000,000
Shares Outstanding (Diluted Average) 489,000,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $3.96
Dec2017 $1.70
Dec2016 -$2.09
Dec2015 -$31.72
Dec2014 $3.91
Dec2013 -$0.06
Dec2012 -$0.52
Dec2011 $11.25
Dec2010 $10.31
Dec2009 -$5.58
Dec2008 -$4.85
Dec2007 $8.00
Dec2006 $6.34
Dec2005 $6.26
Dec2004 $4.38
Dec2003 $4.04
Dec2002 $0.31
Dec2001 $0.36
Dec2000 $2.75
Dec1999 -$0.84
Dec1998 -$1.66

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate -$2.61
Dec2017 -$5.82
Dec2016 -$8.42
Dec2015 -$8.86
Dec2014 $3.37
Dec2013 $3.09
Dec2012 $3.82
Dec2011 $5.27
Dec2010 $2.47
Dec2009 -$0.29
Dec2008 $2.91
Dec2007 $6.46
Dec2006 $5.22
Dec2005 $4.13
Dec2004 $2.83
Dec2003 $1.81
Dec2002 $0.53

Recommended Reading:

Other ModernGraham posts about the company

Devon Energy Corp Valuation – March 2018 $DVN
Devon Energy Corp Valuation – July 2016 $DVN
58 Companies in the Spotlight This Week – 1/31/15
Devon Energy Corporation Annual Valuation – 2015 $DVN
14 Companies in the Spotlight This Week – 1/18/14

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Disclaimer:

The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  See my current holdings here.  This article is not investment advice; any reader should speak to a registered investment adviser prior to making any investment decisions.  ModernGraham is not affiliated with the company in any manner.  Please be sure to review our detailed disclaimer.

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