Exxon Mobil (XOM) Stock Up as Oil Prices Rise

Exxon Mobil (XOM) stock is gaining as oil prices increased after the International Energy Agency reported a decline in oil investments.
By Amanda Gomez ,

NEW YORK (TheStreet) -- Exxon Mobil Corp. (XOM) - Get Report stock is increasing 0.43% to $82.30 in afternoon trading on Tuesday as oil prices gained after the International Energy Agency (IEA) reported a drop in oil investments, according to Reuters.

WTI crude is up 0.78% to $44.21 per barrel, while Brent crude is rising 0.66% to $47.50 per barrel this afternoon, according to the CNBC.com index.

Despite the decline in investments, the oversupply of crude oil is expected to keep prices below $80 per barrel until 2020, Reuters added.

Investments are expected to fall more than 20% this year, as major oil companies cut projects due to falling oil prices.

Capital spending has be cut by about $22 billion this year with about 80 projects being cancelled worldwide, Lamar Mckay, BP's (BP) head of exploration and production, told Reuters.

Irving, TX-based Exxon Mobil is an oil and natural gas producer with oil refining and transporting businesses.

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 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 disappointing return on equity, a generally disappointing performance in the stock itself and weak operating cash flow.

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

  • XOM's debt-to-equity ratio is very low at 0.20 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Even though the company has a strong debt-to-equity ratio, the quick ratio of 0.48 is very weak and demonstrates a lack of ability to pay short-term obligations.
  • XOM, with its decline in revenue, slightly underperformed the industry average of 37.2%. Since the same quarter one year prior, revenues fell by 37.4%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • The share price of EXXON MOBIL CORP has not done very well: it is down 10.80% 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.
  • Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. When compared to other companies in the Oil, Gas & Consumable Fuels industry and the overall market, EXXON MOBIL CORP's return on equity is below that of both the industry average and the S&P 500.
  • 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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