NEW YORK (TheStreet) -- Exxon Mobil (XOM - Get Report) rose 1.52% to $97.70, up $1.46 from its previous close of $96.24, at the close of the trading on Friday to finish a surge of more than 3% after Bank of America/Merrill Lynch upgraded the world's largest publicly traded international oil and natural gas company to "buy" from "neutral."
The firm cited relative valuation, improving upgrade margins and increasing free cash flow as the reasons for the upgrade and set a $110 target price.
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- Compared to where it was 12 months ago, the stock is up, but it has so far lagged the appreciation in the S&P 500. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
- XOM's debt-to-equity ratio is very low at 0.13 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Despite the fact that XOM's debt-to-equity ratio is low, the quick ratio, which is currently 0.53, displays a potential problem in covering short-term cash needs.
- Regardless of the drop in revenue, the company managed to outperform against the industry average of 7.8%. Since the same quarter one year prior, revenues slightly dropped by 3.0%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- EXXON MOBIL CORP's earnings per share declined by 13.2% in the most recent quarter compared to the same quarter a year ago. The company has suffered a declining pattern of earnings per share over the past two years. However, we anticipate this trend to reverse over the coming year. During the past fiscal year, EXXON MOBIL CORP reported lower earnings of $7.37 versus $9.70 in the prior year. This year, the market expects an improvement in earnings ($7.59 versus $7.37).
- You can view the full analysis from the report here: XOM Ratings Report