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Exxon Mobil Corporation (NYSE:XOM): A Profitable Oil Stock to Consider Now?

AInvestThursday, Dec 5, 2024 7:54 pm ET
4min read


Exxon Mobil Corporation (NYSE:XOM) has long been a dominant player in the global oil and gas industry, and its stock has consistently been a favorite among investors seeking exposure to the energy sector. As the company continues to navigate the complex landscape of energy markets, the question remains: is XOM still a profitable oil stock to consider now?

Exxon Mobil's strategic positioning in global oil and gas markets has been a significant driver of its profitability. The company's diverse portfolio spans key basins such as the Permian, Guyana, and the Bakken, minimizing basin-specific risks. In particular, the Permian and Guyana have been lucrative for Exxon, with Guyana's potential to add $1.5 billion to earnings annually. The Bakken, while less profitable, provides regional stability.



Exxon's cost-cutting initiatives and operational efficiency have also played a pivotal role in its profitability. The company has doubled its earnings per barrel in the upstream business since 2019, and in Q3 2024, it reported earnings of $8.6 billion, cash flow from operating activities of $17.6 billion, and free cash flow of $11.3 billion. Exxon's record production at Permian has contributed significantly to earnings growth, with record production at Permian adding $1.5 billion to earnings in Q3 2024.



Geopolitical risks and regulatory changes pose both challenges and opportunities for Exxon Mobil. In the near term, OPEC+ countries' production cuts could boost oil prices, benefiting XOM. However, geopolitical tensions, such as the Israel-Hezbollah conflict or the Syrian war, could disrupt supply and impact prices. Regulatory changes, like the EU's proposed carbon border tax, may increase costs and reduce profitability. In the long term, stricter environmental regulations could accelerate XOM's transition to cleaner energy, potentially enhancing its reputation and market position.

Analysts' positive outlook on Exxon Mobil is supported by the company's strong financial performance in recent years. With a 5-year net income CAGR of 18.13% and TTM net income of $33.70 billion, Exxon Mobil's earnings growth is evident. In Q3 2024, earnings were $8.6 billion, cash flow from operating activities was $17.6 billion, and free cash flow was $11.3 billion. With record production at Permian, Exxon's upstream business has doubled earnings per barrel since 2019, driving analysts' positive outlook.



As of November 2024, the average analyst rating for XOM is "Buy," with a 12-month price target of $130.22, indicating a 13.45% increase from the current stock price of $114.78. Analysts like Jason Gabelman of TD Cowen have maintained a "Strong Buy" rating, with price targets ranging from $127 to $132. These high ratings and price targets reflect analysts' confidence in Exxon Mobil's ability to navigate the energy transition and maintain profitability.

In conclusion, Exxon Mobil Corporation (NYSE:XOM) remains a profitable oil stock to consider now, given its strategic positioning in global oil and gas markets, strong financial performance, and analysts' positive outlook. While geopolitical risks and regulatory changes pose challenges, Exxon's cost-cutting initiatives and operational efficiency have driven its profitability. As investors continue to evaluate the energy sector, Exxon Mobil's prospects make it an attractive option for those seeking exposure to the oil and gas industry.
Disclaimer: the above is a summary showing certain market information. AInvest is not responsible for any data errors, omissions or other information that may be displayed incorrectly as the data is derived from a third party source. Communications displaying market prices, data and other information available in this post are meant for informational purposes only and are not intended as an offer or solicitation for the purchase or sale of any security. Please do your own research when investing. All investments involve risk and the past performance of a security, or financial product does not guarantee future results or returns. Keep in mind that while diversification may help spread risk, it does not assure a profit, or protect against loss in a down market.