Will Exxon-Mobil Keep Rising with Oil...
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Mar
26
Jonathan Yates
Will Exxon-Mobil Keep Rising with Oil Falling
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Even though the price of oil fell again, Exxon-Mobil (NYSE: XOM) is up for the last week, month, quarter and year of market action.  For 2013, Exxon-Mobil has risen by 4.80%.

Exxon-Mobil is a $400 billion company that earns $40-50 billion a year.  In the fourth quarter of 2012, Exxon-Mobil, as is its tradition, spent $5 billion on a stock buyback.  Not much moves the stock as the beta is just 0.51, with institutional ownership just over 50%..

As to be expected from a company like Exxon-Mobil, the financials are rock solid.  Some are priced high such as the price-to-earnings growth (PEG) ratio at 2.64 (anything above 1 is bad), but for an entity with price-to-earnings growth ratio of just 9.30, that is hardly troubling.  Earnings are expected to drop for Exxon-Mobil, but with virtually no debt, there will not be a drag on the cash flow.  The return-on-equity for the last five years has averaged 25%, almost double the industry figure of only 14%.

Looking at the candlestick patterns, Exxon-Mobil has been strong with engulfing positive formations for March.  Candlestick patterns for last 2012 were negative due to concerns about The Fiscal Cliff and US economic growth.  Even with the Eurozone concerns, Exxon-Mobil is above the upper Bollinger Bands, another bullish sign.

Looking at other indicators, Exxon-Mobil is trading above its 20-day, 50-day, and 200-day moving averages.  So is the exchange traded fund for oil, United States Oil (NYSE: USO).  But the USO has a short float of 57.99%.  The short float for Exxon-Mobil is just 0.79%.  Clearly investors do not anticipate the falling price of oil to drag down the shares of Exxon-Mobil.  Now trading around $90, the mean analyst target price for Exxon-Mobil for the next year is $94.42. A 2.53% dividend that increases annually adds to the total return.



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