Exxon Mobil (XOM) Valuation Check After Strong Recent Share Price Momentum

Exxon Mobil (XOM) is back on many investors’ screens after a recent move in its share price, with the stock posting a return over the past month and a stronger gain over the past three months.

See our latest analysis for Exxon Mobil.

Even with a 2.9% 7 day share price pullback, Exxon Mobil’s recent 30 day share price return of 5.8% and year to date share price return of 31.0% suggest momentum has been strong. The 1 year total shareholder return of 47.8% and 5 year total shareholder return of 247.5% highlight how meaningful dividends and reinvested income have been for long term holders.

If Exxon Mobil’s move has you looking across the energy space, it could be a good moment to check out other producers through the 93 nuclear energy infrastructure stocks

With Exxon Mobil trading close to analyst targets but sitting on an estimated 35% intrinsic discount, the key question is simple: is the stock still undervalued, or is the market already pricing in future growth?

Most Popular Narrative: 27.1% Overvalued

Exxon Mobil’s last close at $160.69 sits above the narrative fair value of $126.39, which frames the current price against a longer term earnings and cash flow story.

The focus on profitability and high value assets will lead to steady earnings growth.

Share buybacks will be the primary driver of EPS growth.

Read the complete narrative.

Want to see what is driving that valuation gap? The narrative leans on disciplined production, improving margins and a richer downstream mix to support its cash flow view.

Result: Fair Value of $126.39 (OVERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, this story can shift quickly if oil prices weaken for a sustained period or if heavy investment in lower emission projects compresses margins more than expected.

Find out about the key risks to this Exxon Mobil narrative.

Another View: Cash Flows Point a Different Way

The narrative fair value of $126.39 suggests Exxon Mobil looks 27.1% overvalued at $160.69. Yet our DCF model, using forecast future cash flows, points to a value of $248.04, which implies the shares are trading at a 35.2% discount instead. Which story do you trust more: the narrative or the cash flows?

Look into how the SWS DCF model arrives at its fair value.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Exxon Mobil for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover 62 high quality undervalued stocks. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Next Steps

With mixed signals on value and future outcomes, this is the kind of setup where you want to look under the hood yourself and move quickly to form your own stance. A good starting point is the 3 key rewards and 1 important warning sign.

Looking for more investment ideas?

If Exxon Mobil has you thinking more broadly about your portfolio, this is the moment to widen your search and line up your next potential moves using targeted stock lists.

• Target potential value opportunities by scanning companies that screen well on quality and price with the 62 high quality undervalued stocks.
• Strengthen your income stream by focusing on companies with higher yield profiles through the 12 dividend fortresses.
• Prioritize resilience by filtering for businesses flagged for lower risk characteristics using the 67 resilient stocks with low risk scores.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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