Exxon Mobil (XOM) Stock Declines Today as Oil Prices Fall
NEW YORK (TheStreet) -- Exxon Mobil (XOM) - Get Report shares are down 0.42% to $83.97 in trading today as oil prices ended their brief rally from earlier this week and decline today on fears that a nuclear enrichment agreement between the U.S. and Iran would lead to the lifting of sanctions against Iranian oil and add to the glut of crude supply already on the market.
Industry standard Brent crude for May delivery is down 2.42% to $57.76 per barrel and West Texas crude for May delivery is also down 2.62% to $50.08 in trading today.
Oil experienced a quick rally in trading yesterday after Saudi forces launched airstrikes against separatist rebels in Yemen. Oil prices rose as worries that the important shipping route that borders Yemen would be compromised by the Saudi airstrikes.
However, those fears abated today as the prospect of Iranian oil, which has been shunned by the West due to sanctions against the Iranian government, has caused oil to reverse its rally. U.S. led sanctions have caused Iranian oil output to fall to 1 million barrels a day from 2.5 million barrels a day in 2012, according to Reuters.
TheStreet Ratings team rates EXXON MOBIL CORP as a Hold with a ratings score of C+. TheStreet Ratings Team has this to say about their recommendation:
"We rate EXXON MOBIL CORP (XOM) a HOLD. The primary factors that have impacted our rating are mixed - some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its reasonable valuation levels and largely solid financial position with reasonable debt levels by most measures. However, as a counter to these strengths, we also find weaknesses including weak operating cash flow, poor profit margins and disappointing return on equity."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- XOM's debt-to-equity ratio is very low at 0.17 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 0.51, displays a potential problem in covering short-term cash needs.
- XOM, with its decline in revenue, slightly underperformed the industry average of 19.6%. Since the same quarter one year prior, revenues fell by 22.6%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- The gross profit margin for EXXON MOBIL CORP is rather low; currently it is at 17.91%. It has decreased from the same quarter the previous year. Regardless of the weak results of the gross profit margin, the net profit margin of 8.63% is above that of the industry average.
- Net operating cash flow has decreased to $7,415.00 million or 27.36% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.
- You can view the full analysis from the report here: XOM Ratings Report