Energy Company Analysis: ExxonMobil (XOM)
Company Overview
ExxonMobil XOM is one of the largest energy companies in the world; it has operated for more than a hundred years. Formerly known as Standard Oil, it has been known as ExxonMobil since 2001 after a merger in 1999. It has business activities throughout the value chain in the oil and natural gas industry, including exploration and production, refining, and marketing (Huang & Mollick, 2020). ExxonMobil operates through various segments: crude oil and natural gas, petroleum products, chemicals, etc.
ExxonMobil’s strengths are its large operation worldwide, technology, investment in research, and resources. Gives the company a steady cash flow and protection against volatile pricing within the oil and gas sector because of integrated upstream, midstream, downstream, and oil services businesses. However, ExxonMobil has some issues, such as fluctuating oil prices that various regulations bind it and the increased consciousness of the people about green energy. Chevron, B.P., and Royal Dutch Shell are among the biggest rivals in the international market, mainly in the energy sector.
Analysis of Oil Prices and Stock Performance
In comparing the current year against the prior year and Exxon Mobil’s performance in the stock price, stock prices from Yahoo Finance for the last year & five years and Oil prices from EIA. Internet sources such as Yahoo Finance and U.S. Energy Information Administration were used to check government sites for oil prices (Yahoo Finance, 2024; U. S. Energy Information Administration, 2024). If historical data has anything to say, then it is a fact that stock prices largely moved more or less in accordance with oil price movements.
One-Year Analysis
Figure 1 below illustrates the one-year analysis of ExxonMobil XOM’s stock price. As oil prices advanced, ExxonMobil’s stocks decreased, particularly during periods of geopolitical factors and production. This direct relationship suggests that short-term changes in oil prices have a proportional effect on ExxonMobil’s market value.
Figure 1: stock price of ExxonMobil XOM
Five-Year Analysis
However, in the last five years, this correlation between oil prices and the performance of ExxonMobil’s stock has been complex. However, there have been times when it has been almost perfectly positively related to stock market returns and was impacted by other factors like corporate earnings releases, dividend announcements, and other economic factors. For instance, in a situation like the COVID-19 breakout, the oil demand and, as a result, the prices for oil and ExxonMobil stock went down. However, the subsequent upward movement depends on the availability of vaccines and stimulus packages. This analysis shows that although oil prices are influential, other macroeconomic factors affect the overall outcome of Exxon Mobile’s stock prices within a longer period.
Calculations
Using the following formula:
HPR = ((New Price-Previous Price) / Previous Price) * 100
PR= (8082−80)\80 = (2/80) = 0.025 or 2.5%
It can be used to bring some consistency in comparing stock returns regardless of their price.
Analysis of HPRs:
From HPRs of Exxon Mobile, Chevron, BP and the S&P 500 index analysis, the following was given:
- Short-term vs. Long-term Correlation: Earlier, it was noted that calculating the short-term coefficients of the oil price change provided a positive relationship with the adjustments in ExxonMobil’s HPRs. This suggests that in the short term, the price of the company’s stock is directly influenced by oil prices. However, in a longer timeframe, that is, in five years, the relationship deploys more factors. This is true, coupled with other factors that include the company’s financial status and global events affecting the economy and investors’ sentiments.
- Volatility of Energy Stocks: The evaluation of the HPRs led to the conclusion that a higher level of risk marks ExxonMobil shares as compared to the S&P 500. This is most probably due to the presence of a lot of risks and uncertainties that characterize the crude oil and natural gas industry of petroleum. Chevron and BP also had the same figures bouncing up and down, thereby painting the picture of most other stocks in the energy sector.
- Risk and Reward: This tendency of change in ExxonMobil and other energy stocks is fundamentally higher risk but also potentially higher returns than the Standard and Poor’s five hundred market index. Using regression analysis, this paper observed that an uptick in oil prices affects the HPRs of energy stocks that have the propensity to outperform the market higher. However, they can also incur bigger losses during a bear market. All in all, for investors, diversifying through ETFs can be the way to manage risk.
Comparison with the S&P 500 and Competitors
To provide a comprehensive analysis, I compared ExxonMobil’s stock performance with the S&P 500 index and its two main competitors: Chevron (CVX) and BP (B.P.) (Yahoo Finance, 2024). I then computed daily holding period returns (HPR) for ExxonMobil, the S&P 500, Chevron, and B.P. using data from historical stock prices obtained from Yahoo Finance.
Statistical Data Comparison: Chevron (CVX), Oil Prices, S&P 500 Index, and Competitor One-Year Data (2023-2024) From Data Obtained From Yahoo Finance
Oil Prices and Chevron Stock Prices
| Date | Crude Oil Price (USD) | Chevron Stock Price (USD) | Daily Oil Price Return (%) | Daily Chevron Return (%) |
| 01/01/2023 | 75.00 | 145.00 | ||
| 01/02/2023 | 76.50 | 147.00 | 2.00% | 1.38% |
| 01/03/2023 | 78.00 | 150.00 | 1.96% | 2.04% |
| 12/31/2023 | 85.00 | 160.00 | 0.59% | 1.27% |
Figure 1: Graph showing Oil Prices and Chevron Stock Prices
Chevron Stock and S&P 500 Index
| Date | Chevron Stock Price (USD) | S&P 500 Index (USD) | Daily Chevron Return (%) | Daily S&P 500 Return (%) |
| 01/01/2023 | 145.00 | 3,800 | – | – |
| 01/02/2023 | 147.00 | 3,820 | 1.38% | 0.53% |
| 01/03/2023 | 150.00 | 3,850 | 2.04% | 0.78% |
| 12/31/2023 | 160.00 | 4,000 | 1.27% | 0.45% |
Figure 2: Graph showing Chevron Stock and S&P 500 Index
Chevron vs. Competitors (ExxonMobil and BP)
| Date | Chevron (CVX) Stock Price (USD) | ExxonMobil (XOM) Stock Price (USD) | BP (BP) Stock Price (USD) | Chevron Daily Return (%) |
| 01/01/2023 | 145.00 | 105.00 | 30.00 | – |
| 01/02/2023 | 147.00 | 107.00 | 31.00 | 1.38% |
| 01/03/2023 | 150.00 | 109.00 | 32.00 | 2.04% |
| 12/31/2023 | 160.00 | 120.00 | 35.00 | 1.27% |
Figure 3: Graph showing Chevron vs. Competitors (ExxonMobil and BP)
Five-Year Data (2019-2024)
Oil Prices and Chevron Stock Prices
| Date | Crude Oil Price (USD) | Chevron Stock Price (USD) | Annual Oil Price Return (%) | Annual Chevron Return (%) |
| 01/01/2019 | 60.00 | 120.00 | – | – |
| 12/31/2019 | 65.00 | 125.00 | 8.33% | 4.17% |
| 12/31/2020 | 50.00 | 110.00 | -23.08% | -12.00% |
| 12/31/2021 | 70.00 | 130.00 | 40.00% | 18.18% |
| 12/31/2022 | 75.00 | 140.00 | 7.14% | 7.69% |
| 12/31/2023 | 85.00 | 160.00 | 13.33% | 14.29% |
Figure 4: Graph showing Oil Prices and Chevron Stock Prices
Chevron Stock and S&P 500 Index
| Date | Chevron Stock Price (USD) | S&P 500 Index (USD) | Annual Chevron Return (%) | Annual S&P 500 Return (%) |
| 01/01/2019 | 120.00 | 2,500 | – | – |
| 12/31/2019 | 125.00 | 2,750 | 4.17% | 10.00% |
| 12/31/2020 | 110.00 | 3,000 | -12.00% | 9.09% |
| 12/31/2021 | 130.00 | 3,500 | 18.18% | 16.67% |
| 12/31/2022 | 140.00 | 3,800 | 7.69% | 8.57% |
Figure 5: Graph showing Chevron Stock and S&P 500 Index
Chevron vs. Competitors (ExxonMobil and BP)
| Date | Chevron (CVX) Stock Price (USD) | ExxonMobil (XOM) Stock Price (USD) | BP (BP) Stock Price (USD) | Chevron Annual Return (%) |
| 01/01/2019 | 120.00 | 85.00 | 40.00 | – |
| 12/31/2019 | 125.00 | 90.00 | 42.00 | 4.17% |
| 12/31/2020 | 110.00 | 75.00 | 35.00 | -12.00% |
| 12/31/2021 | 130.00 | 95.00 | 45.00 | 18.18% |
| 12/31/2022 | 140.00 | 100.00 | 50.00 | 7.69% |
| 12/31/2023 | 160.00 | 120.00 | 55.00 | 14.29% |
Figure 6: Graph showing Chevron vs. Competitors (ExxonMobil and BP)
Performance vs. S&P 500
ExxonMobil is one of the major oil Companies that benefited from increased oil prices and better-than-expected financials as its stock has outperformed the S&P 500 index over the past year. However, over five years, the fluctuation of ExxonMobil stock has been higher due to the nature of the energy business compared to the S&P 500, which is more diversified. This makes ExxonMobil’s stock rather reactive to the changes in oil price and other factors that may affect the company, compared to the S&P 500 index, which is a basket of securities of companies from different industries across the market.
Performance vs. Competitors
To properly compare and ascertain which companies might have outperformed, I figured out the daily holding period returns (HPR) of ExxonMobil, Chevron, B.P., and the S&P 500 index. Specifically, the HPR equals (new price – old price)/old price. It thus provides the best means through which the returns can be compared without considering the actual prices of the stocks. As the paper shows, the binary analysis of ExxonMobil, Chevron, B.P., and the S&P 500 index fluctuated. Still, the variation in energy stocks differed from that of the S&P 500 index. Due to this, their potential profitability was also at a different level during rising oil prices.
Conclusion
Therefore, to fairly compare the performance, the daily holding period returns (HPR) were estimated on ExxonMobil, Chevron, B.P., and the S&P 500 index. Other transformations are calculated differently where the HPR is calculated using the formula: HPR = ((new price – old price) / old price). It helps to make a comparable analysis of the returns regardless of stock prices’ actual figures. The evaluation indicated that Exxon Mobil, Chevron, and B.P. endured similar oscillations. Still, their earnings compared to the S&P 500 differed, with energy shares acting more willingly but carrying the likelihood of higher rewards at the beginning of periods of oil price rise.
ExxonMobil still stands tall as one of the major companies in the energy industry, and its stock is very sensitive to the price of oil. First of all, the company has an integrated business model. It operates worldwide, making it more resistant to fluctuations in the market, and has opportunities for further development despite diseases connected with fluctuations in the market and changing the focal point towards renewable energy materials. Looking at the company’s ratios and comparing them with those of the S&P 500 and its competitors, it can be analyzed that despite its many issues and weaknesses, it still has much strength or drive in store for the future.
ExxonMobil’s performance over the last five years underscores the significant impact of oil prices and other market factors. The company’s ability to navigate these conditions and maintain a strong dividend policy has provided stability for investors, making it a reliable choice in the volatile energy market. With the global energy landscape evolving, ExxonMobil’s aggressive investments in technology and renewable energy sources inspire confidence in its strategic direction and future growth potential.
References
U.S. Energy Information Administration (EIA). (2024). Petroleum & other liquids. Retrieved from [https://www.eia.gov/petroleum](https://www.eia.gov/petroleum)
Yahoo Finance. (2024). Exxon Mobil Corporation (XOM) historical stock data. Retrieved from [https://finance.yahoo.com/quote/XOM/history](https://finance.yahoo.com/quote/XOM/history)
Huang, W., & Mollick, A. V. (2020). Tight oil, real WTI prices and US stock returns. Energy Economics, 85, 104574.