{"id":130813,"date":"2022-10-20T00:00:00","date_gmt":"2022-10-20T00:00:00","guid":{"rendered":"https:\/\/nursingstudybay.com\/2022\/10\/20\/bong-and-stock-analysis-exxon-mobil-corporation\/"},"modified":"2022-10-20T00:00:00","modified_gmt":"2022-10-20T00:00:00","slug":"bong-and-stock-analysis-exxon-mobil-corporation","status":"publish","type":"post","link":"https:\/\/www.studyproessays.com\/help\/bong-and-stock-analysis-exxon-mobil-corporation\/","title":{"rendered":"Bong and Stock Analysis: Exxon Mobil Corporation"},"content":{"rendered":"

Study Bay Coursework Assignment Writing Help<\/p>\n

\n\n\n\n\n\n\n
\n<\/td>\n<\/tr>\n
\n

\nBong and Stock Analysis: Exxon Mobil Corporation\n<\/p>\n<\/td>\n<\/tr>\n

\n

\nExxon Mobil Corporation\n<\/p>\n<\/td>\n<\/tr>\n

\n

\n\u00a0<\/strong>\n<\/p>\n<\/td>\n<\/tr>\n

\n

\n\u00a0<\/strong>\n<\/p>\n<\/td>\n<\/tr>\n<\/table>\n

\nExxon Mobil (Ticker symbol:\u00a0 XOM) is the largest publicly traded international oil and gas company that uses technology and innovation to help meet the world\u2019s growing energy needs.\u00a0\u00a0\u00a0 An extensive history that spans more than 135 years began with the very first oil well found in Titusville, Pennsylvania.\u00a0\u00a0\u00a0 The start of the original Standard Oil Company, a refining company, and then other similar types of companies, spawned acquisitions made over the years to grow the company with a wide variety of products throughout the world (Exxon Mobil).\n<\/p>\n

\nFinancial Leverage:<\/u><\/em><\/strong>\n<\/p>\n

\nThe following financial ratios illustrate the risk or leverage of the company over the past five years as calculated based on the balance sheet figures at Morningstar.com.\u00a0\u00a0 For 2017, the debt to asset ratio has decreased from .49 to .46.\u00a0 The range of debt to equity for the sector of oil and gas is within 0.5 and 0.9 when crude oil prices trade between $50 and $70 a barrel, so Exxon Mobil is right in line with the sector as a whole (Market Watch).\u00a0\n<\/p>\n\n\n\n\n\n
\n<\/td>\n\n

\n2013\n<\/p>\n<\/td>\n

\n

\n2014\n<\/p>\n<\/td>\n

\n

\n2015\n<\/p>\n<\/td>\n

\n

\n2016\n<\/p>\n<\/td>\n

\n

\n2017\n<\/p>\n<\/td>\n<\/tr>\n

\n

\nDebt\/Equity Ratio\n<\/p>\n<\/td>\n

\n

\n0.04\n<\/p>\n<\/td>\n

\n

\n0.07\n<\/p>\n<\/td>\n

\n

\n0.12\n<\/p>\n<\/td>\n

\n

\n0.17\n<\/p>\n<\/td>\n

\n

\n0.13\n<\/p>\n<\/td>\n<\/tr>\n

\n

\nDebt\/Asset Ratio\n<\/p>\n<\/td>\n

\n

\n0.49\n<\/p>\n<\/td>\n

\n

\n0.50\n<\/p>\n<\/td>\n

\n

\n0.49\n<\/p>\n<\/td>\n

\n

\n0.49\n<\/p>\n<\/td>\n

\n

\n0.46\n<\/p>\n<\/td>\n<\/tr>\n

\n

\nInterest Coverage\n<\/p>\n<\/td>\n

\n

\n6413.33\n<\/p>\n<\/td>\n

\n

\n181.52\n<\/p>\n<\/td>\n

\n

\n71.63\n<\/p>\n<\/td>\n

\n

\n18.59\n<\/p>\n<\/td>\n

\n

\n32.07\n<\/p>\n<\/td>\n<\/tr>\n<\/table>\n

\nThere is no record of preferred dividends having been paid during this time which would indicate that preferred shares are not part of the capital structure.\u00a0 Bonds, however, are part of the long-term debt in the table below.\u00a0 Since 2013 Exxon Mobil\u2019s total liabilities percentage has been between 49% and 50%.\u00a0 The long-term debt increased substantially within the 5-year period reviewed beginning in 2014, with annual trending increases of approximately 73%, 66%, and 48% through 2016.\u00a0 In comparison, the interest coverage ratio (referenced in the prior table) shows a declining trend.\u00a0 So as debt increased, the ratio, decreased.\u00a0 Decreasing ratios could indicate problems when they approach low numbers like 2 or 3, but for Exxon Mobil, it is still showing that the interest commitment is being covered adequately.\u00a0\n<\/p>\n\n\n\n\n
\n<\/td>\n\n

\n2013\n<\/p>\n<\/td>\n

\n<\/td>\n\n

\n2014\n<\/p>\n<\/td>\n

\n<\/td>\n\n

\n2015\n<\/p>\n<\/td>\n

\n<\/td>\n\n

\n2016\n<\/p>\n<\/td>\n

\n<\/td>\n\n

\n2017\n<\/p>\n<\/td>\n<\/tr>\n

\n

\nLT debt*\n<\/p>\n<\/td>\n

\n

\n6,516\n<\/p>\n<\/td>\n

\n

\n73.08%\n<\/p>\n<\/td>\n

\n

\n\u00a0\u00a0\u00a0\u00a0 11,278\n<\/p>\n<\/td>\n

\n

\n65.69%\n<\/p>\n<\/td>\n

\n

\n\u00a0\u00a0 18,687\n<\/p>\n<\/td>\n

\n

\n48.27%\n<\/p>\n<\/td>\n

\n

\n\u00a0\u00a0 27,707\n<\/p>\n<\/td>\n

\n

\n-16.70%\n<\/p>\n<\/td>\n

\n

\n\u00a0\u00a0 23,079\n<\/p>\n<\/td>\n<\/tr>\n

\n

\nTotal Liabilities*\n<\/p>\n<\/td>\n

\n

\n172,805\n<\/p>\n<\/td>\n

\n

\n~1.30%\n<\/p>\n<\/td>\n

\n

\n175,094\n<\/p>\n<\/td>\n

\n

\n~(5.20%)\n<\/p>\n<\/td>\n

\n

\n165,947\n<\/p>\n<\/td>\n

\n

\n~(1.80%)\n<\/p>\n<\/td>\n

\n

\n162,989\n<\/p>\n<\/td>\n

\n

\n~(1.02%)\n<\/p>\n<\/td>\n

\n

\n161,003\n<\/p>\n<\/td>\n<\/tr>\n<\/table>\n

\n*in millions\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Source:\u00a0 Morningstar\n<\/p>\n

\nDuring the oil downturn that began in 2014, Exxon increased its long-term debt from roughly $6.5 billion to $27.7 billion.\u00a0 At the peak, however, long-term debt still only made up about 15% of its capital structure.\u00a0 The added debt was used to support long-term capital investment plans and the company\u2019s growing dividend (Fool.com).\u00a0\n<\/p>\n

\nParts of the long-term capital investment plans include fracking.\u00a0 In the last 10 years, the process of \u201cfracking\u201d has become more widely used in North America, specifically in the U.S. which allowed for oil and gas production to grow rapidly.\u00a0 The amount of time to turnover from the extraction to the end product was reduced considerably.\u00a0 A simplified explanation of fracking is the process of injecting water or some other liquid and sand, through the use of hydraulics, into shale to cause the rock to fracture in order to force open the rock and release the oil or gas inside.\n<\/p>\n

\n(Investopedia.com, 2018).\u00a0 The Corporation anticipates several project ( help with nursing paper writing from experts with MSN & DNP degrees)s will come online over the next few years providing additional production capacity. Exxon Mobil\u2019s cash flows are highly dependent on crude oil and natural gas prices. However, due to its financial strength, large, long-term capital expenditures are able to be made.\u00a0 A large and diverse portfolio of development project ( help with nursing paper writing from experts with MSN & DNP degrees)s and exploration opportunities helps mitigate the overall political and technical risks of Exxon Mobil\u2019s upstream segment and associated cash flow.\u00a0 The risk associated with failure or delay of any single project ( help with nursing paper writing from experts with MSN & DNP degrees) would not have a significant impact on the Corporation\u2019s liquidity or ability to generate sufficient cash flows for operations and its fixed commitments (Exxon Mobil).\n<\/p>\n

\nThe table below shows two of Exxon Mobil\u2019s 14 corporate bonds available on the market at the time of this writing and available to view at: finra-markets.morningstar.com\/BondCenter<\/a>.\u00a0 The information reflects the last price available for the day.\u00a0 These bonds are part of the corporation\u2019s long-term debt structure.\n<\/p>\n\n\n\n\n
\n

\nSymbol\n<\/p>\n<\/td>\n

\n

\nCoupon\n<\/p>\n<\/td>\n

\n

\nCallable\n<\/p>\n<\/td>\n

\n

\nMaturity\n<\/p>\n<\/td>\n

\n

\nMoody\u2019s\n<\/p>\n<\/td>\n

\n

\nS & P\n<\/p>\n<\/td>\n

\n

\nPrice\n<\/p>\n<\/td>\n

\n

\nYield\n<\/p>\n<\/td>\n<\/tr>\n

\n

\nXOM4108355\n<\/p>\n<\/td>\n

\n

\n3.176\n<\/p>\n<\/td>\n

\n

\nYes\n<\/p>\n<\/td>\n

\n

\n3\/15\/2024\n<\/p>\n<\/td>\n

\n

\nAaa\n<\/p>\n<\/td>\n

\n

\nAA+\n<\/p>\n<\/td>\n

\n

\n98.799\n<\/p>\n<\/td>\n

\n

\n3.425\n<\/p>\n<\/td>\n<\/tr>\n

\n

\nXOM4218995\n<\/p>\n<\/td>\n

\n

\n2.693\n<\/p>\n<\/td>\n

\n

\nYes\n<\/p>\n<\/td>\n

\n

\n3\/6\/2022\n<\/p>\n<\/td>\n

\n

\nAaa\n<\/p>\n<\/td>\n

\n

\nAA+\n<\/p>\n<\/td>\n

\n

\n100.44\n<\/p>\n<\/td>\n

\n<\/td>\n<\/tr>\n<\/table>\n

\nOriginal offerings of bonds are priced at the face value at maturity, usually $1000 par or 100%.\u00a0 The first bond in the list is callable and, presuming the par value in this quote is $1000, the last price or \u201cquote\u201d for the first bond is $98.799 and would cost the buyer $987.99 per bond.\u00a0 The calculation for the cost of the bond to purchase is 98.799 divided by 100 and multiplied by 1000 (par value).\u00a0 The annual coupon interest payment is $31.76 and is calculated by using the same process, coupon amount of 3.176\/100 x 1000 (par value).\u00a0 For the second bond, presuming the same par value would be priced at $1004.40 to purchase with a $26.93 coupon payment per bond.\u00a0 That is calculated by taking the price of 100.44 dividing by 100 and multiplying by 1000 par value (100.44\/100 x 1000); the interest payment would be (2.693\/100 x 1000).\u00a0 The quote gives the yield-to-maturity (YTM) for the first bond transaction as 3.425.\u00a0 To calculate the current yield of 3.22% (at this writing) divide the coupon rate by the price (3.176\/98.799 x 100).\u00a0 The current yield on the second bond is 2.68% (2.693\/100.44 x 100).\u00a0 The table below shows the calculated current yields and yields to maturity.\u00a0 Since the information on the bonds at the website is fluid, the yields will fluctuate with every change in price.\n<\/p>\n\n\n\n\n
\n<\/td>\n\n

\nLast prices in $$$\n<\/p>\n<\/td>\n

\n

\nAnnual coupon interest payment\n<\/p>\n<\/td>\n

\n

\nCurrent yield\n<\/p>\n<\/td>\n

\n

\nYTM\n<\/p>\n<\/td>\n<\/tr>\n

\n

\nXOM4108355\n<\/p>\n<\/td>\n

\n

\n$987.99\n<\/p>\n<\/td>\n

\n

\n$31.76\n<\/p>\n<\/td>\n

\n

\n3.22%\n<\/p>\n<\/td>\n

\n

\n3.40%\n<\/p>\n<\/td>\n<\/tr>\n

\n

\nXOM4218995\n<\/p>\n<\/td>\n

\n

\n$1004.40\n<\/p>\n<\/td>\n

\n

\n$26.93\n<\/p>\n<\/td>\n

\n

\n2.68%\n<\/p>\n<\/td>\n

\n

\n2.58%\n<\/p>\n<\/td>\n<\/tr>\n<\/table>\n

\nThe Yield-to-Maturity (YTM) is calculated to anticipate the total return expected on a bond if held to maturity and uses present value (from the time value of money concept)\u00a0 in the calculation and the result is annualized.\u00a0 To find the YTM, the MS Excel function for RATE was used below.\u00a0 Notice that the YTM is greater than the current yield for the first bond that is trading below par and for the second bond, trading greater than par, the YTM is less than the current yield.\n<\/p>\n

\nFirst Bond:\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Second Bond:\n<\/p>\n\n\n\n\n\n\n\n
\n

\nPar<\/strong>\n<\/p>\n<\/td>\n

\n

\n\u00a0$\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 1,000.00\n<\/p>\n<\/td>\n<\/tr>\n

\n

\nCoupon rate<\/strong>\n<\/p>\n<\/td>\n

\n

\n2.69%\n<\/p>\n<\/td>\n<\/tr>\n

\n

\nPayment<\/strong>\n<\/p>\n<\/td>\n

\n

\n\u00a0$\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 26.93\n<\/p>\n<\/td>\n<\/tr>\n

\n

\nTerm<\/strong>\n<\/p>\n<\/td>\n

\n

\n4\n<\/p>\n<\/td>\n<\/tr>\n

\n

\nYield<\/strong>\n<\/p>\n<\/td>\n

\n

\n2.58%\n<\/p>\n<\/td>\n<\/tr>\n

\n

\nPrice<\/strong>\n<\/p>\n<\/td>\n

\n

\n($1,004.40)\n<\/p>\n<\/td>\n<\/tr>\n<\/table>\n\n\n\n\n\n\n\n
\n

\nPar<\/strong>\n<\/p>\n<\/td>\n

\n

\n\u00a0$\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 1,000.00\n<\/p>\n<\/td>\n<\/tr>\n

\n

\nCoupon rate<\/strong>\n<\/p>\n<\/td>\n

\n

\n3.18%\n<\/p>\n<\/td>\n<\/tr>\n

\n

\nPayment<\/strong>\n<\/p>\n<\/td>\n

\n

\n\u00a0$\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 31.79\n<\/p>\n<\/td>\n<\/tr>\n

\n

\nTerm<\/strong>\n<\/p>\n<\/td>\n

\n

\n6\n<\/p>\n<\/td>\n<\/tr>\n

\n

\nYield<\/strong>\n<\/p>\n<\/td>\n

\n

\n3.40%\n<\/p>\n<\/td>\n<\/tr>\n

\n

\nPrice<\/strong>\n<\/p>\n<\/td>\n

\n

\n($987.99)\n<\/p>\n<\/td>\n<\/tr>\n<\/table>\n

\nThese bonds are top rated, \u201chigh grade\u201d quality bonds by the credit rating agencies of Moody\u2019s and S & P.\u00a0 As an investor wanting to purchase one of these bonds, I would choose the first bond with the YTM of 3.40%.\u00a0 One reason is that it is yielding more than the risk-free rate for only a six year term.\u00a0 As of this writing, that rate is 2.99% for the 10-year Treasury bond.\u00a0 If I were to buy a 10-year Treasury bond, I would be locked into 2.99% for 10-years, unless of course I would choose to sell the bond\u2014which in that case, if interest rates were higher than 2.99% prior to the maturity date, the price to sell would reflect the lack of demand for this bond.\u00a0 This is 10-years without risk; 10-years backed by the full faith and credit of the U.S. Treasury.\u00a0 In this comparison, I have the flexibility to own this corporate bond for a term that is 40% less and earn a rate that is 13.5% more.\n<\/p>\n

\nThe YTM is greater than the second bond by .82 percent.\u00a0 The first bond is callable, which would add additional risk to the investor for reinvestment options.\u00a0 At the time of maturity, interest rates could be lower and that is where the risk is.\u00a0 There is six years to go and I am not too concerned about its call ability.\u00a0 News outlets constantly report how interest rates are expected to rise, should that occur, the corporation will want to keep a lower rate than the market offers.\u00a0 The company\u2019s ability to meet its debt obligations is due to the way it has positioned itself to be able to carry on even if the price of oil drops to $40\/barrel (Market Watch).\u00a0 The company had been leveraged quite a bit more in the mid-to-late-2000s; so then when prices climbed at the pump, the profits were used to pay down the debt.\u00a0 If the duration of the bond was longer, there would be a concern.\n<\/p>\n

\nStock Performance<\/u><\/em><\/strong>\n<\/p>\n

\nThe stock performance of Exxon Mobil in comparison with one of its main competitors, BP, is reviewed through their respective market ratios in the table below.\u00a0 The shaded areas are not applicable since those ratios require current pricing for the calculation.\n<\/p>\n\n\n\n\n\n\n\n\n\n\n\n
\n<\/td>\n\n

\nExxon Mobil\n<\/p>\n<\/td>\n

\n

\nBP\n<\/p>\n<\/td>\n<\/tr>\n

\n

\nTicker Symbol:\n<\/p>\n<\/td>\n

\n

\nXOM\n<\/p>\n<\/td>\n

\n

\nBP\n<\/p>\n<\/td>\n<\/tr>\n

\n<\/td>\n\n

\n2015\n<\/p>\n<\/td>\n

\n

\n2016\n<\/p>\n<\/td>\n

\n

\n2017\n<\/p>\n<\/td>\n

\n

\nCurrent\n<\/p>\n<\/td>\n

\n

\n2017\n<\/p>\n<\/td>\n

\n

\nCurrent\n<\/p>\n<\/td>\n<\/tr>\n

\n

\nDividend\n<\/p>\n<\/td>\n

\n

\n2.88\n <\/p>\n<\/td>\n

\n

\n2.98\n<\/p>\n<\/td>\n

\n

\n3.06\n<\/p>\n<\/td>\n

\n

\n3.18\n<\/p>\n<\/td>\n

\n

\n2.40\n<\/p>\n<\/td>\n

\n

\n2.42\n<\/p>\n<\/td>\n<\/tr>\n

\n

\nBook Value\/share\n<\/p>\n<\/td>\n

\n

\n41.08\n<\/p>\n<\/td>\n

\n

\n41.13\n<\/p>\n<\/td>\n

\n

\n43.00\n<\/p>\n<\/td>\n

\n

\n44.96\n<\/p>\n<\/td>\n

\n

\n29.83\n<\/p>\n<\/td>\n

\n

\n\u2014\n<\/p>\n<\/td>\n<\/tr>\n

\n

\nEPS\n<\/p>\n<\/td>\n

\n

\n3.85\n<\/p>\n<\/td>\n

\n

\n1.88\n<\/p>\n<\/td>\n

\n

\n4.63\n<\/p>\n<\/td>\n

\n

\n5.44\n<\/p>\n<\/td>\n

\n

\n1.03\n<\/p>\n<\/td>\n

\n

\n2.58\n<\/p>\n<\/td>\n<\/tr>\n

\n

\n\u03b2\n<\/p>\n<\/td>\n

\n<\/td>\n\n<\/td>\n\n<\/td>\n\n

\n0.92\n<\/p>\n<\/td>\n

\n<\/td>\n\n

\n0.32\n<\/p>\n<\/td>\n<\/tr>\n

\n

\nP\/E\n<\/p>\n<\/td>\n

\n<\/td>\n\n<\/td>\n\n<\/td>\n\n

\n14.29\n<\/p>\n<\/td>\n

\n<\/td>\n\n

\n13.14\n<\/p>\n<\/td>\n<\/tr>\n

\n

\nPrice to Book\n<\/p>\n<\/td>\n

\n<\/td>\n\n<\/td>\n\n<\/td>\n\n

\n1.73\n<\/p>\n<\/td>\n

\n<\/td>\n\n

\n1.32\n<\/p>\n<\/td>\n<\/tr>\n

\n

\nYield\n<\/p>\n<\/td>\n

\n<\/td>\n\n<\/td>\n\n<\/td>\n\n

\n4.22\n<\/p>\n<\/td>\n

\n<\/td>\n\n

\n6.23\n<\/p>\n<\/td>\n<\/tr>\n<\/table>\n

\n\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Source:<\/sup>\u00a0 <\/sup>Morningstar.com<\/sup>\n<\/p>\n

\nExxon Mobil has a history of consistency when it comes to the dividends payable to the shareholders.\u00a0 For the three years stated, 2015 through 2017, the dividend increased 3.4% in 2016, 2.7% in 2017, and currently, 3.9%.\u00a0 Those are substantial increases.\u00a0 Remember too, as previously mentioned, added debt supports the company\u2019s growing dividend.\u00a0 The current book value per share for Exxon Mobil is $44.96 as compared to the closing price on the stock exchange of $77.64.\u00a0 That gives the impression of strong, upward pricing for the stock.\u00a0 The reality is that the oil and gas sector are sensitive areas of the market and recently have experienced broad swings in the market price pattern.\u00a0 BP posted a book value per share in 2017 of $29.83 and the recent closing price of BP was $39.51\u2013 higher than the book value.\u00a0 The book value is what the accounting department of a corporation states that the shares in the company are worth.\u00a0 The earnings per share or EPS, breaks down the dollars of profit across all outstanding shares.\u00a0 So in the case of Exxon Mobil, the current EPS is 5.44 which means for every share of stock outstanding, the company earned, or made a profit of $5.44.\u00a0 BP on the other hand, has a current EPS of 2.58 or $2.58 of net income for each of the 3,342 shares outstanding.\n<\/p>\n

\nA look at the P\/E ratios, price to earnings, for Exxon Mobil and BP is where we find a close comparison.\u00a0 The industry average is around 17.\u00a0 The P\/E ratio, current price divided by the EPS, is a price multiple that investors use when evaluating a stock.\u00a0 The number represents how much the investor is paying for every dollar earned. So for Exxon Mobil\u2019s P\/E of 14.29, that means for every dollar earned by the company, the investor will pay $14.29.\u00a0 Compare that with BP\u2019s P\/E of $13.14.\u00a0 If the P\/E ratio along with the EPS were the only ratios used, the better buy would be BP\u2019s stock because a shareholder is paying less in comparison to Exxon Mobil for the company\u2019s earnings.\n<\/p>\n

\nExxon Mobil\u2019s stock has a current yield of 4.22% compared to BP\u2019s current yield of 6.23%.\u00a0 These figures vary slightly (if manually calculated with figures from the table) due to the timing of the updates posted to the respective websites.\u00a0 Basically, the yield is calculated by dividing the dividend by the current price.\u00a0 Since the price changes throughout a trading day, the yields will vary slightly.\u00a0 Both yields are attractive with BP\u2019s current yield being very<\/em> attractive.\u00a0 If an investor is looking for income greater than the risk-free rate on a 10 year Treasury bond, (which as previously mentioned is at 2.99%), he or she might be interested in Exxon Mobil stock with a yield of 4.22.\u00a0 That would give the investor 41% more income; or if BP stock was chosen, a little over 100% greater income yield.\u00a0\n<\/p>\n

\nThe Gordon Growth Model calculation below places a required rate of return of 7.50% for an investor and uses the 52-week high of $89.30 as the expected price one year from now.\u00a0 It calculates a market price of $40.76 for the stock.\u00a0 A smart investor would likely not be interested in paying the current market price of $77.64 and walk away from the purchase since the intrinsic value as calculated shows that the stock is overvalued.\u00a0 That calculated market price, however, does fall in line to the book value as stated from the Morningstar figures in the prior table.\u00a0 See the calculation below.\n<\/p>\n\n\n\n\n\n\n\n\n
\n

\nDividend0<\/sub>\n<\/p>\n<\/td>\n

\n

\n\u00a0$\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 2.98\n<\/p>\n<\/td>\n<\/tr>\n

\n

\nDividend1<\/sub>\n<\/p>\n<\/td>\n

\n

\n\u00a0$\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 3.06\n<\/p>\n<\/td>\n<\/tr>\n

\n

\nDividend2<\/sub>\n<\/p>\n<\/td>\n

\n

\n\u00a0$\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 3.29\n<\/p>\n<\/td>\n<\/tr>\n

\n

\nReq. Rate % (R )\n<\/p>\n<\/td>\n

\n

\n7.50%\n<\/p>\n<\/td>\n<\/tr>\n

\n

\nGrowth rate (g )\n<\/p>\n<\/td>\n

\n

\n3.94%\n<\/p>\n<\/td>\n<\/tr>\n

\n

\nPrice0<\/sub>\n<\/p>\n<\/td>\n

\n

\n\u00a0$\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 40.76\n<\/p>\n<\/td>\n<\/tr>\n

\n

\nPrice1<\/sub>\n<\/p>\n<\/td>\n

\n

\n\u00a0$\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 89.30\n<\/p>\n<\/td>\n<\/tr>\n<\/table>\n

\nBeta (\u03b2) as listed in the table of market ratios is a measure of a stock\u2019s volatility when comparing to the entire market.\u00a0 Taking a look at Exxon Mobil\u2019s beta of .92 gives an indication that the stock has a tendency to be less risky than the market as a whole which is considered a beta of 1.0; BP has a beta of .32 and so a portfolio with either or both would be less risky than the market.\u00a0 The return of the S & P 500 is estimated to be at 7.5% between 1926 and 2014.\u00a0 This market return has been adjusted for inflation over that period of time.\u00a0 It reflects the overall return of 500 companies that have large market capitalization.\u00a0 If the above figures of the risk-free rate, beta, and the average return of the S & P 500 were to be applied to the Capital Asset Pricing Model calculation, the expected return for Exxon Mobil would be 7.14% with a risk premium of 4.51%.\u00a0 The risk premium is the difference between the risk-free rate and the expected yield and is meant to compensate for the risk an investor takes beyond the risk-free rate.\n<\/p>\n\n\n\n\n\n\n
\n

\nRisk Free Rate (RFR)\n<\/p>\n<\/td>\n

\n<\/td>\n\n

\n2.99%\n<\/p>\n<\/td>\n

\n<\/td>\n<\/tr>\n
\n

\nBeta (\u03b2)\n<\/p>\n<\/td>\n

\n<\/td>\n\n

\n0.92\n<\/p>\n<\/td>\n

\n<\/td>\n<\/tr>\n
\n

\nReturn of the Market (RM<\/sub>)\n<\/p>\n<\/td>\n

\n

\n7.50%\n<\/p>\n<\/td>\n

\n<\/td>\n<\/tr>\n
\n

\nRisk Premium\n<\/p>\n<\/td>\n

\n<\/td>\n\n

\n4.51%\n<\/p>\n<\/td>\n

\n

\nRisk Premium = R<\/strong>M<\/sub><\/strong> \u2013 RFR<\/strong>\n<\/p>\n<\/td>\n<\/tr>\n

\n

\nExpected Return\n<\/p>\n<\/td>\n

\n<\/td>\n\n

\n7.14%\n<\/p>\n<\/td>\n

\n

\nR<\/strong>STOCK<\/sub><\/strong> = RFR + \u03b2(R<\/strong>M<\/sub><\/strong> \u2013 RFR)<\/strong>\n<\/p>\n<\/td>\n<\/tr>\n<\/table>\n

\nThe two charts below show historical pricing for the past 12 month period for Exxon Mobil and its competitor, BP.\u00a0\n<\/p>\n

\nExxon Mobil <\/u><\/strong>\n<\/p>\n

\n\"\"
\n<\/img><\/p>\n

\nSource:<\/sup>\u00a0 <\/sup>YahooFinance<\/sup>\n<\/p>\n

\nBP<\/u><\/strong>\n<\/p>\n

\n
\n<\/img><\/p>\n

\nSource:<\/sup>\u00a0 <\/sup>YahooFinance<\/sup>\n<\/p>\n

\nWhile the market pricing incremental intervals are the same on the right of the chart, the wider spacing between the numbers for BP adds intensity to the hills and valleys.\u00a0\n<\/p>\n

\nThe trending patterns are very similar with visible drops in the market price in early February, mid, to late May, August, and November.\u00a0 Along with the drop in price, which indicates a sell-off, the bottom bar chart represents the volume of shares traded.\u00a0 The charts for each are color coded to indicate buying or selling patterns\u2014Green for buying and Red for selling.\u00a0 The sell-off in February was due to disappointing earnings for the prior quarter and was experienced by both Exxon and its other competitors.\u00a0 The same pattern throughout the year was all after earnings reports that missed the target.\u00a0 Shareholders watch those indicators closely and react, right or wrong, to charts and news.\u00a0 Some hold to different investment theories as to the stock market pricing such as the Random Walk Theory or the Efficient Market hypothesis.\n<\/p>\n

\nUpon reviewing the two competitors side by side, I would have to say that I would feel more inclined to study and learn more about BP.\u00a0 I would be concerned as an investor in Exxon Mobil with its high market price for the stock in comparison to BP and relative to its book value.\u00a0 When the market price drops sharply, as the chart shows for 2018, it could be quite an emotional roller coaster ride.\u00a0\n<\/p>\n

\nAs previously stated Exxon Mobil\u2019s credit rating is very good and is able to meet its obligations.\u00a0 BP, since the 2010 Gulf oil spill, has been focused on strengthening the company.\u00a0 As a result, BP\u2019s stock has a bigger yield than Exxon Mobil, it\u2019s priced much lower, and the ratios discussed are much more comfortable.\u00a0 I have this nagging thought in my mind about how Exxon Mobil continues to pay a dividend to shareholders, increase the dividend, and uses borrowed money to do so.\u00a0 I cannot, at this time, warm to a recommendation to purchase shares of Exxon Mobil at its current market price.\u00a0 I think that while project ( help with nursing paper writing from experts with MSN & DNP degrees)s have been placed and readied to be brought online in the near future, perhaps there are too many project ( help with nursing paper writing from experts with MSN & DNP degrees)s in the pipeline, no pun intended.\u00a0 It just seems the company may be spread too thin for the efficiency needed to increase shareholder wealth.\u00a0 That may be too conservative a view for some.\n<\/p>\n

\nBP is overvalued as well but if an investment in the oil and gas sector was desired, I would watch closely for the price to fall and consider an investment once the price matches or trades lower than the book value.\n<\/p>\n<\/p>\n

    \n
  • \nExxon Mobil. (n.d.). About Us<\/em>. Retrieved from Exxon Mobil: https:\/\/corporate.exxonmobil.com\/en\/company\/about-us\n<\/li>\n
  • \nExxon Mobil. (n.d.). Investor reports<\/em>. Retrieved from Exxon Mobil: https:\/\/cdn.exxonmobil.com\/~\/media\/global\/files\/investor-reports\/2018\/2017-financial-statements.pdf\n<\/li>\n
  • \nFINRA. (n.d.). finra-markets.morningstar.com<\/em>. Retrieved from http:\/\/finra-markets.morningstar.com\/BondCenter\/Results.jsp.\n<\/li>\n
  • \nFool.com. (2018, November 24). How safe is Exxon Mobil and its 4% Dividend Yield?<\/em> Retrieved from (https:\/\/www.fool.com\/investing\/2018\/11\/24\/how-safe-is-exxonmobil-and-its-4-dividend-yield.aspx\n<\/li>\n
  • \nInvestopedia.com. (2018, September 6). Common debt-to-equity ratios for oil and gas companies<\/em>. Retrieved from https:\/\/www.investopedia.com\/ask\/answers\/060315\/what-debt-equity-ratio-common-oil-and-gas.asp\n<\/li>\n
  • \nMarket Watch. (n.d.). Retrieved from Market Watch: https:\/\/www.marketwatch.com\/investing\/stock\/xom\/profile\n<\/li>\n
  • \nYahoo Finance. (n.d.). Exxon Mobil Corporation<\/em>. Retrieved from https:\/\/finance.yahoo.com\/quote\/XOM\/key-statistics?p=XOM\n<\/li>\n<\/ul>\n<\/div>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

    Study Bay Coursework Assignment Writing Help Bong and Stock Analysis: Exxon Mobil Corporation Exxon Mobil Corporation \u00a0 \u00a0 Exxon Mobil (Ticker symbol:\u00a0 XOM) is the\u2026<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[8827,10099,10540,10536,10892,10538,10539,10537,10891],"tags":[10549,10616,10615,7687,10627,8857,10552,10295,10548,10622,8907],"class_list":["post-130813","post","type-post","status-publish","format-standard","hentry","category-australia-essays","category-buy-essay","category-cheap-essay-writers","category-get-assignments-done","category-page-paper","category-phd-essay-writers","category-research-paper-writing-service-for-any-topic","category-study-bay-essay","category-write-my-assignment-ireland","tag-ai-plagiarism-free-essay-writing-tool","tag-australian-best-tutors","tag-best-trans-tutors","tag-buy-essay-uk","tag-cheap-dissertation-writer","tag-help-with-writing-an-essay","tag-help-write-my-paper-ai-free","tag-homework-for-you","tag-online-essay-writers","tag-phd-essays","tag-write-my-essay-for-me"],"_links":{"self":[{"href":"https:\/\/www.studyproessays.com\/help\/wp-json\/wp\/v2\/posts\/130813","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.studyproessays.com\/help\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.studyproessays.com\/help\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.studyproessays.com\/help\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.studyproessays.com\/help\/wp-json\/wp\/v2\/comments?post=130813"}],"version-history":[{"count":0,"href":"https:\/\/www.studyproessays.com\/help\/wp-json\/wp\/v2\/posts\/130813\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.studyproessays.com\/help\/wp-json\/wp\/v2\/media?parent=130813"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.studyproessays.com\/help\/wp-json\/wp\/v2\/categories?post=130813"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.studyproessays.com\/help\/wp-json\/wp\/v2\/tags?post=130813"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}