Exxon Mobil (XOM) – What’s Most Relevant

Exxon Mobil (NYSE: XOM) reported its quarterly results Friday, noting a sharp decline in earnings due to lower energy prices. The company, its shares hammered this year by sharply lower energy prices, guided investor attention to 4 key points. The points were that despite bearing lower energy prices, Exxon Mobil is: meeting operating and investment goals; benefiting from its integrated operations through the diversified revenues of its downstream businesses; growing production impressively and importantly; and still generating significant cash flow and positive free cash flow. So, it intimates, you should ignore its 51% drop in quarterly earnings and instead look to its potential in a different pricing environment, which is implied will exist. Toward that end, the company offered some important reminders about the global demand outlook. It also strongly reminded investors of its always-on cost reduction focus. I’ll remind investors of the company’s ability to capture high grade production at better value today with its strong balance sheet. Exxon Mobil has diversified integrated operations that increasingly allow it to level off the costs and benefits of production and feedstock, though still imperfectly. Given its shareholder value focus, ability to capitalize on what for many others is an extremely treacherous environment, and with an energy outlook that isn’t so terrifying to me, I see XOM as a must buy on current share weakness. Still, I advise investors to add XOM and other energy stocks to holdings carefully now, in increments, while prices likely remain volatile near-term. See my full report on Exxon Mobil (XOM) here.

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