Buy Exxon Mobil Corporation (XOM) Stock Ahead of Earnings

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Exxon Mobil Corporation (NYSE: XOM ) will report first-quarter fiscal 2017 earnings results on Friday before the opening bell. With XOM stock now trading near 52-week lows, investors who have waited for a good entry point now have their chance.

I Wouldn't Buy Exxon Mobil Corporation (XOM) Stock, But You Can

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The recent decline in oil prices has pressured the entire sector, sending the Energy Select Sector SPDR (ETF) (NYSEARCA: XLE ) down 10% year to date and 9% over the past three months. And, XOM stock, which closed Friday at $80.69, has been one of the hardest equities hit, falling 10.6% on the year.

Concerns about a global oil supplies glut has sent oil prices below $50 per barrel, heightening fears about the sustainability of several large energy players, including Exxon peers such as BP plc (ADR) (NYSE: BP ) and Chevron Corporation (NYSE: CVX ).

But, with almost $4 billion in cash on the balance sheet and another $22 billion in operating cash flow, the Texas-based integrated oil giant isn't going anywhere, despite being one of the worst-performing equities in the Dow Jones Industrial Average . And, when Exxon's earnings are released, much of the fear will subside, making its 3.68% annual dividend yield an attractive quality to own ahead of Friday's results.

For the quarter that ended in March, Wall Street expects Exxon to earn 87 cents per share on revenue of $67.34 billion, translating to year-over-year growth of 102% and 38.3%, respectively. For the full year that ends December, analysts forecast earnings of $3.92 per share, compared to $2.37 per share last year, while full-year revenue of $294.46 billion would mark an increase of 31% year over year.

Whether you're looking at it from the current quarter or full year, there is nothing conservative about these numbers. Oil prices may be trending in the wrong direction at various points of the year, killing hopes of prices reaching $60 or $80 per barrel at some point in 2017. But, with Exxon's quarterly earnings per share expected to surge more than 100% year over year, the company is doing more than making the best of a bad situation.

Bottom Line for XOM Stock

XOM stock, which is tied to the price of oil, is not going to impress with breathtaking gains over the next 12-18 months, but with cash flow still on the rise combined with 3.68% annual yield, patience is still the best strategy. And with the XOM stock price at just 17 times fiscal 2018 earnings-per-share estimates of $4.62, XOM stock should reach $100 in the next 12-18 months, delivering 24% returns.

As of this writing, Richard Saintvilus did not hold a position in any of the aforementioned securities.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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