Exxon Mobil Corp (XOM)

Conclusion

ExxonMobil Holdings Corporation is a large integrated oil and gas company. It explores for and produces crude oil and natural gas, sells fuels and lubricants under the Exxon, Esso and Mobil brands, and runs chemical plants. At a price of 164.73 USD on 2026-11-09, its market capitalisation is 671.93 billion USD and its enterprise value is 694.03 billion USD.

The verdict is fair. Today's price-to-earnings ratio of 16.5x sits 4.8% above its ten-year median of 15.8x, and enterprise value to EBITDA of 8.4x sits 20.4% above its median of 7.0x. Price to free cash flow of 15.6x is 23.6% below its median of 20.5x. The discounted cash flow gives 174.77 USD per share, and the fair value from historical multiples is 135.88 USD. The fair value band runs from 124.26 to 186.39 USD with a midpoint of 155.33 USD, a margin of safety of -5.7% at the current price. The reverse discounted cash flow implies growth of 2.1% a year, while revenue actually grew at a five-year compound rate of 12.7%.

What holds the case up is free cash flow conversion of 1.06 on a trailing basis, a return on invested capital of 13.1% against a weighted cost of capital of 8.6%, and an Altman Z-score of 3.97. What would break it is the decline in earnings per share, down 20.3% over three years, the expected 11.8% drop in next year's earnings, and the current ratio of 1.19, which is the weakest balance sheet figure but still adequate.

Financial health

Financial strength is green, held up by a net debt to EBITDA of 0.27, interest coverage of 66.8x and an Altman Z-score of 3.97. The current ratio of 1.19 and quick ratio of 0.87 are adequate rather than strong, and debt to equity is a low 0.13. The Altman model was designed for manufacturers, so its reading is only a rough guide for an integrated oil company, though the zone is safe. Insolvency risk: low, about 0.05% by the estimate of the Ohlson model over one to two years. The company has little balance sheet pressure, so the business is not at risk of default on current figures.

Earnings quality

Earnings quality is green. Free cash flow conversion is 1.06 on a trailing basis and 1.03 over five years, so reported profits turn into cash. The accrual ratio of -0.05 points to cash earnings running ahead of accounting profit. The Beneish M-score of -3.16 is well below the manipulation threshold, which is reassuring. The Piotroski score is 4 out of 9, a middling result. Free cash flow after stock-based compensation is 42.96 billion USD, but the stock-based compensation figure itself is not available. The share count has barely moved, with a five-year compound change of 0.16%, so buybacks are offsetting dilution rather than shrinking the base. Seven of the last eight quarters beat estimates, with an average surprise of 4.7%. Analysts have raised current-year estimates by 17.4% over 90 days, but next year's estimates have also risen 13.5%, even though next year's expected earnings growth is -11.8%.

Profitability

Profitability is green. The operating margin of 12.4% stands well above its ten-year median of 8.3%, and the net margin of 10.5% compares with a median of 8.3%. The gross margin is 25.4% against a median of 23.0%. Return on invested capital is 13.1% against a weighted cost of capital of 8.6%, a given difference of 4.5 percentage points that indicates value creation. The five-year median return on invested capital is 12.7%, so the current level is in line with its history. Return on equity is 15.3%. The DuPont split shows a net margin of 8.9%, asset turnover of 0.72 and an equity multiplier of 1.73, so leverage adds only modestly to the return on equity.

Growth

Growth is red. Revenue compounds at -6.7% over three years, 12.7% over five years and 3.1% over ten years, and it has grown in only five of the last ten years. Earnings per share fell at a compound rate of 20.3% over three years, though they still grew 5.7% a year over ten years. Free cash flow per share fell 26.6% over three years but rose 19.6% over ten years. The recent decline follows a strong run, and the three-year figures show the business is cyclical. Next year's expected earnings decline of 11.8% is the main reason growth is assessed poorly today.

Valuation

Valuation is yellow, with the verdict of fair. Price-to-earnings of 16.5x is 4.8% above its ten-year median, while price to free cash flow of 15.6x is 23.6% below its median. Price to sales of 1.73x is 32.2% above its median and price to book of 2.53x is 35.0% above its median. The discounted cash flow gives 174.77 USD per share, using a discount rate of 8.87%, and the fair value from historical multiples is 135.88 USD. The fair value band runs from 124.26 to 186.39 USD, with a midpoint of 155.33 USD and a margin of safety of -5.7% at the current price. The reverse discounted cash flow implies 2.1% growth against 12.7% revenue growth over five years. The dividend yield is 2.6%, with a payout of 40.2% of free cash flow and a forward yield of 2.4%. The fair value is an order of magnitude built on fixed assumptions, a 5% equity risk premium and capped growth, not a price target.

Risks

The biggest risk is a further fall in earnings. The three-year decline in earnings per share of 20.3% and the expected next-year drop of 11.8% would weaken the case if they persisted, since the price-to-earnings premium over history would become harder to justify. A current ratio of 1.19 leaves little margin if cash flow weakened sharply, though net debt to EBITDA of 0.27 provides a cushion. Revenue has shrunk over three years at -6.7%, so the business depends on commodity prices and volumes that the analysis cannot forecast. Stock-based compensation is not available, so its effect on true earnings cannot be measured. This analysis has no debt maturity schedule and no revenue breakdown by segment, so it cannot show which parts of the business drive the decline or when debt falls due.