5. Exxon Mobil Corporation (NYSE:XOM)
Average Analyst Estimates as of May 28: $136.87
Average Analyst Upside as of May 28: 17.32%
P/E Ratio: 14.31
Exxon Mobil Corporation (NYSE:XOM) has been a dominant force in the LNG sector for over four decades, with its roots dating back to John D. Rockefeller’s Standard Oil. Over its 140-year history, Exxon Mobil has transformed from a local kerosene distributor in the United States to a global industry leader, ranking prominently among the top publicly traded companies in the petroleum and petrochemical fields.
On April 26, Exxon Mobil Corporation (NYSE:XOM) announced first-quarter earnings of $8.2 billion, or $2.06 per diluted share. The company’s capital and exploration expenditures were $5.8 billion, in line with its full-year guidance of $23 billion to $25 billion.
That said, not everyone seems bullish on XOM. Truist Securities recently downgraded its rating on Exxon Mobil Corporation (NYSE:XOM) from Buy to Hold and lowered the price target from $146.00 to $124.00, a change reflecting the firm’s view that ExxonMobil’s shares may underperform compared to its competitors in the near term due to current market valuations and the recent acquisition of Pioneer. While acknowledging the positive impact of the company’s Guyana operations and the Pioneer acquisition, it expects the company’s free cash flow (FCF) yield to remain below that of its peers until at least 2025. This expectation is partly due to the ongoing integration of Pioneer’s operations, a process often referred to as “digestion” in the industry.
As of the end of the first quarter of 2024, Insider Monkey’s tracking data showed that 81 out of 919 hedge funds held stakes in Exxon Mobil Corp (NYSE:XOM). The largest stakeholder among them was Ken Fisher’s Fisher Asset Management, with a $3.07 billion investment.
Madison Dividend Income Fund stated the following regarding Exxon Mobil Corporation (NYSE:XOM) in its first quarter 2024 investor letter:
“This quarter we are highlighting Exxon Mobil Corporation (NYSE:XOM) as a relative yield example in the Energy sector. XOM is a leading integrated oil and natural gas company. It has upstream assets that develop and produce oil and natural gas, along with downstream refining and chemical manufacturing assets. We believe it has attractive low-cost acreage in the Permian basin and has a sizeable growth opportunity in Guyana. Further, we think XOM has a sustainable competitive advantage due to size and scale, and its ability to integrate refining and chemical assets provides a low-cost advantage versus competitors.
Our thesis on XOM is that it will grow production volumes of oil and gas moderately over the next few years, while limiting excessive capital investment that plagued the industry from 2014-2020. Production growth will come from its 2023 acquisition of Pioneer Natural Resources, which is the largest producer in the Permian basin. XOM plans to double its Permian output by 2027, to 2 million barrels per day. Capital spending will be limited to $20-25 billion per year through 2027, which should allow for significant amounts of cash to be returned to shareholders including a $35 billion share repurchase program and continued dividend increases. Higher oil prices would provide a tailwind to our thesis but are not necessary. We think XOM can grow earnings and cash flow if oil prices remain above $60 per barrel…”
