February 2, 2015

VALUATION WATCH: Overvalued stocks now make up 28.01% of our stocks assigned a valuation and 8.38% of those equities are calculated to be overvalued by 20% or more. One sector is calculated to be overvalued.

Oil Spill

Exxon-Mobil Posts Worst Results Since 2002

Exxon Mobil (XOM) Corporation's principal business is energy, involving exploration for, and production of, crude oil and natural gas, manufacturing of petroleum products and transportation and sale of crude oil, natural gas and petroleum products. Exxon Mobil is a major manufacturer and marketer of basic petrochemicals, including olefins, aromatics, polyethylene and polypropylene plastics and a wide variety of specialty products. Exxon Mobil is engaged in exploration for, and mining and sale of coal, copper and other minerals.

We have been discussing the carnage in the global oil market for some time now. Today we can see how the huge decline in crude prices has effected the largest player in the industry, Exxon Mobil. The company posted Q4 2015 numbers today and, as expected, they were not good. This bad news for Exxon-Mobil follows on the heels of similar poor results from competitors BP and Chevron

The company reported estimated 2015 earnings of $16.2 billion compared with $32.5 billion a year earlier. Fourth quarter earnings were $2.8 billion, or $0.67 per diluted share, down from $6.6 billion in the fourth quarter of 2014. These big declines were the result of the price declines for crude oil, which is now trading around $30/barrel. For "upstream" earnings, meaning the actual extracted oil/gas itself, earnings were $857 million in the fourth quarter of 2015, down $4.6 billion from the fourth quarter of 2014.

Rex W. Tillerson, chairman and chief executive officer noted that the sharply reduced earnings “reflect the challenging environment." Jeff Woodbury, Exxon’s vice president, echoed Tillerson's remarks and noted that there was no doubt that “profitability is compressed in this environment.” Exxon also announced that their share buyback program would be sharply curtailed this year, which will remove another prop for share prices.

The oil market continues to be hampered by over supply at a time of weakening demand. Bringing Iranian oil fields back on line at this time certainly will not help that situation. And, while seasonal demand may help with that glut, it is tough to see if that will be a panacea given the rise in global-average temps and the milder winters in effect over the last decade or so. One thing which could help would be a quick end to the Chinese economic hiccup and a better global growth picture.

ValuEngine continues its HOLD recommendation on EXXON MOBIL CRP for 2016-02-01. Based on the information we have gathered and our resulting research, we feel that EXXON MOBIL CRP has the probability to ROUGHLY MATCH average market performance for the next year. The company exhibits ATTRACTIVE Company Size but UNATTRACTIVE Earnings Growth Rate.

You can download a free copy of detailed report on XOM from the link below.

ValuEngine Forecast
	Target Price*	Expected Return
1-Month	76.16	-0.17%
3-Month	76.70	0.54%
6-Month	77.54	1.64%
1-Year	74.75	-2.02%
2-Year	86.68	13.62%
3-Year	94.80	24.27%

Valuation & Rankings
Valuation	1.15% overvalued	Valuation Rank(?)	27
1-M Forecast Return	-0.17%	1-M Forecast Return Rank	37
12-M Return	-14.84%	Momentum Rank(?)	49
Sharpe Ratio	-0.05	Sharpe Ratio Rank(?)	55
5-Y Avg Annual Return	-0.71%	5-Y Avg Annual Rtn Rank	56
Volatility	15.11%	Volatility Rank(?)	83
Expected EPS Growth	-24.79%	EPS Growth Rank(?)	9
Market Cap (billions)	323.05	Size Rank	100
Trailing P/E Ratio	21.47	Trailing P/E Rank(?)	51
Forward P/E Ratio	28.55	Forward P/E Ratio Rank	12
PEG Ratio	n/a	PEG Ratio Rank	n/a
Price/Sales	1.09	Price/Sales Rank(?)	59
Market/Book	1.83	Market/Book Rank(?)	49
Beta	0.89	Beta Rank	50
Alpha	-0.09	Alpha Rank	46

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