Exxon Mobil (XOM) is another battered giant that has seen earnings and revenue fade.
Despite XOM being one of the biggest oil stocks in the world, with a market capitalization of almost $380 billion and operating cash flow north of $56 billion annually, it looks like one of the shakiest investments on Wall Street. Exxon stock is down about 1% year-to-date despite a broad rally for the market in general.
Oddly enough, it’s not crude oil prices that are the problem for this energy stock, with prices pretty stable above $100 a barrel. The real culprit is profits, with earnings per share at XOM set to decline to the lowest level since 2010 this fiscal year.
Furthermore, the top line has declined year-over-year in five consecutive quarters, so it’s revenue that’s at issue as well as profitability.
Bulls are quick to point out that Exxon stock pays a nice 2.9% dividend — and at about 33% of earnings, there’s plenty of room for that dividend to grow even if profits don’t pick up substantially.
But it’s hard to fight against this kind of big negativity, or the fact that other stocks like Chevron (CVX) or U.K.-based BP (BP) look like better bargains based on forward earnings projections and current valuations.