This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
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
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Exxon or Chevron? Both Seem Reasonable

Stocks in this article: XOM CVX WAG CVS NKE

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

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

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
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

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

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, 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
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!

Markets

DOW 17,804.80 +26.65 0.15%
S&P 500 2,070.65 +9.42 0.46%
NASDAQ 4,765.38 +16.9840 0.36%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs