Exxon Mobil (XOM) Stock Slides on Climate Change Investigation

Exxon Mobil (XOM) stock is declining in late afternoon trading on Thursday, as the New York attorney general opens an investigation into whether the company lied about climate change risks.
By Rachel Graf ,

NEW YORK (TheStreet) -- Exxon Mobil (XOM) - Get Report stock is decreasing by 1.34% to $84.83 in late afternoon trading on Thursday, amid an investigation by the New York attorney general into whether the company lied about climate change risks and how they might affect the oil industry.

Attorney General Eric Schneiderman subpoenaed the energy company on Wednesday for financial records, emails and other documents, sources told the New York Times. 

The attorney general will look into the company's actions as far back as the late 1970's, during which Exxon Mobil spent at least a decade funding groups that undermined climate science, according to the Times. 

The probe will likely focus on whether Exxon Mobil made any business risks from climate change immediately known to the public, the Times adds.

"We unequivocally reject the allegations that Exxon Mobil has suppressed climate-change research," Exxon Mobil VP for Public Affairs Kenneth Cohen told the Times. 

Separately, 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 strongest point has been its strong cash flow from operations. At the same time, however, we also find weaknesses including a generally disappointing performance in the stock itself and feeble growth in the company's earnings per share.

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • Regardless of the drop in revenue, the company managed to outperform against the industry average of 37.0%. Since the same quarter one year prior, revenues fell by 35.9%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • The change in net income from the same quarter one year ago has significantly exceeded that of the Oil, Gas & Consumable Fuels industry average, but is less than that of the S&P 500. The net income has significantly decreased by 47.5% when compared to the same quarter one year ago, falling from $8,070.00 million to $4,240.00 million.
  • EXXON MOBIL CORP's earnings per share declined by 46.6% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, EXXON MOBIL CORP increased its bottom line by earning $7.60 versus $7.37 in the prior year. For the next year, the market is expecting a contraction of 49.1% in earnings ($3.87 versus $7.60).
  • The share price of EXXON MOBIL CORP has not done very well: it is down 12.40% and has underperformed the S&P 500, in part reflecting the company's sharply declining earnings per share when compared to the year-earlier quarter. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.
  • Net operating cash flow has decreased to $9,210.00 million or 25.70% when compared to the same quarter last year. Despite a decrease in cash flow of 25.70%, EXXON MOBIL CORP is in line with the industry average cash flow growth rate of -27.62%.
  • You can view the full analysis from the report here: XOM

Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of Jim Cramer, TheStreet or any of its contributors.

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