Exxon Mobil Corporation XOM is an integrated energy giant, but generates the bulk of its earnings from its upstream operations. With a strong presence in the prolific Permian Basin and offshore Guyana resources, its top and bottom lines are highly vulnerable to fluctuations in oil and natural gas prices.
But investors should not worry much about this vulnerability since ExxonMobil has a strong balance sheet. With a debt-to-capitalization of 13.6%, the integrated energy giant has significantly lower exposure to debt capital. Thus, the company can rely on its strong balance sheet when oil and natural gas prices turn low and the business scenario becomes unfavorable.
Also, with lower exposure to debt capital, XOM can secure additional debt on favorable terms during uncertain situations, allowing it to operate smoothly, pursue lucrative acquisitions and continue rewarding shareholders.
CVX & EOG Also Have Low Debt Load
Chevron Corporation CVX and EOG Resources Inc. EOG, both having robust balance sheets, can also sail through an unfavorable business environment due to their strong financials. While CVX has a debt-to-capitalization of 17.5%, EOG’s debt-to-capitalization stands at 20.3%.
XOM’s Price Performance, Valuation & Estimates
Shares of XOM have gained 6.9% over the past year compared with the 8.7% improvement of the industry.
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From a valuation standpoint, XOM trades at a trailing 12-month enterprise value to EBITDA (EV/EBITDA) of 7.65X. This is above the broader industry average of 4.81X.
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The Zacks Consensus Estimate for XOM’s 2025 earnings has seen upward revisions over the past 30 days.
Image Source: Zacks Investment Research
ExxonMobil stock currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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Exxon Mobil Corporation (XOM) : Free Stock Analysis Report
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This article originally published on Zacks Investment Research (zacks.com).
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
