This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Exxon or Chevron? Both Seem Reasonable

Note that return results trail the business results of Exxon because of P/E compression. That is, in 1999 Exxon was trading at about 27 times earnings against today's much lower multiple of 11. Despite this headwind, both the business and return performance of Exxon were quite impressive over this time period.

Moving to Chevron, we see a similar story. Instead of growing earnings by 12% a year over the last decade and a half, CVX was able to increase its business results by about 15% a year. In addition, Chevron's management also demonstrated a strong propensity to increase its dividend through the years.

Much in the same manner as Exxon, Chevron's total return results were quite strong. In fact -- at roughly 9.3% a year -- they were even stronger. Yet, also notice that the same P/E compression caused a Chevron investor's total return to trail the business results of the company. Specifically, the P/E dropped from about 28 to today's mark of about 10. Still, the business performance and return results of both companies has been quite solid.

So while one might suggest that CVX has had better return and business results in the past, it hardly seems fair to indicate that XOM has been a subpar partnership. In addition, one might point to things like Exxon's superior historic buyback program as a less talked about advantage. For example, as seen below, Chevron has been able to decrease its common shares outstanding from about 2.14 billion in 2003 to today's mark of about 1.93 billion, roughly a 1% yearly decrease.

However, during the same time Exxon was able to decrease its common shares outstanding from about 6.57 billion in 2003 to today's 4.4 billion mark, or roughly a 4% yearly decline. Moving forward, one may believe that Exxon's ongoing share repurchase program could prove more effective than Chevron's program. Interestingly, both companies have an open-ended platform for buying back shares.

But, of course, assessing whether a company is fit as an investment partnership is more about the future than the past. Although history can serve as an important foundation, it's fundamental to consider a company's ongoing prospects. A complete view into each of these companies is beyond the scope of this article, but luckily F.A.S.T. Graphs provides a reasonable starting place.
2 of 3

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
CVX $85.43 0.00%
XOM $81.03 0.00%
AAPL $93.99 0.00%
FB $102.01 0.00%
GOOG $682.40 0.00%


Chart of I:DJI
DOW 15,973.84 +313.66 2.00%
S&P 500 1,864.78 +35.70 1.95%
NASDAQ 4,337.5120 +70.6750 1.66%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs