By Rob Otman
Exxon Mobil (NYSE: XOM) is a $341 billion company today. Investors that bought shares one year ago are sitting on a -8.99% total return. That’s below the S&P 500’s return of 16.07%.
Exxon Mobil stock is underperforming the market. It’s beaten down, but it reports earnings tomorrow. So is it a good time to buy? To answer this question, we’ve turned to the Investment U Stock Grader. Our Research Team built this system to diagnose the financial health of a company.
Our system looks at six key metrics…
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✗ Earnings-per-Share (EPS) Growth: Exxon Mobil reported a recent EPS growth rate of 120.93%. That’s below the oil and gas industry average of 182.47%. That’s not a good sign. We like to see companies that have higher earnings growth.
✓ Price-to-Earnings (P/E): The average price-to-earnings ratio of the oil and gas industry is 44.19. And Exxon Mobil’s ratio comes in at 27.87. It’s trading at a better value than many of its competitors.
✓ Debt-to-Equity: The debt-to-equity ratio for Exxon Mobil stock is 23.73%. That’s below the oil and gas industry average of 69.29%. The company is less leveraged.
✓ Free Cash Flow per Share Growth: Exxon Mobil’s FCF has been higher than that of its competitors over the last year. That’s good for investors. In general, if a company is growing its FCF, it will be able to pay down debt, buy back stock, pay out more in dividends and/or invest money back into the business to help boost growth. It’s one of our most important fundamental factors.
✗ Profit Margins: The profit margin of Exxon Mobil comes in at 7.19% today. And generally, the higher, the better. We also like to see this margin above that of its competitors. Exxon Mobil’s profit margin is below the oil and gas average of 10.80%. So that’s a negative indicator for investors.
✗ Return on Equity: Return on equity gives us a look at the amount of net income returned to shareholders. The ROE for Exxon Mobil is 5.75%, and that’s below its industry average ROE of 8.26%.
Exxon Mobil stock passes three of our six key metrics today. That’s why our Investment U Stock Grader rates it as a Hold.
Please note that our fundamental factor checklist is just the first step in performing your own due diligence. There are many other factors you should consider before investing. That’s why The Oxford Club offers more than a dozen newsletters and trading advisories all aimed at helping investors grow and maintain their wealth.
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Source:: Investment You
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