NEW YORK (TheStreet) -- Trying to predict the direction oil prices will head next has become a fool's game. There are far too many variables in the equation, even without the geopolitical shifts putting pressure on the prices of West Texas Intermediate and Brent crude. ExxonMobil (XOM) - Get Report, which reports second-quarter earnings results Friday before the opening bell, has been one of the energy companies hit hardest by the decline of oil prices.
With shares down 10% on the year and 20% in the past twelve months, there's too much value here to ignore, especially with the stock trading near its 52-week low. XOM stock now trades at 18 times fiscal 2015 consensus earnings estimates of $4.43 per share and 15 times 2016 estimates of $5.27 per share, compared to P/Es of 21 and forward P/E of 17 for the S&P 500 (SPX) index.
This means Exxon is priced at considerable discounts both in the near term and long term. But the bottom line is, regardless of where oil prices land next, and even within an industry still adjusting to a "new normal," the world's largest oil company is not going anywhere. So despite the tepid near-term outlook on oil, Exxon remains a solid buying opportunity at current levels ahead of Friday's results.
For the quarter that ended June, the average analyst earnings estimate calls for $1.09 a share on revenue of $72.48 billion, translating to declines of 46% and 35%, respectively. For the full year, ending in December, earnings are projected to decline 40% to $4.43 a share, while revenue of $277 billion calls for an 33% decline.
However, unlike several of its competitors, the Irving, Texas-based energy giant hasn't forgotten how to execute: It has beaten Wall Street's EPS estimates in five straight quarters.
While oil production remain Exxon's bread-and-butter business, the company benefits from diverse operations that include strong refining and chemical businesses that produce high profit margins. These are assets that some of its peers and rivals lack.
At the same time, Exxon operates a downstream business that can profit off cheaper crude oil, underscoring the importance its integrated business model. So, with the stock trading at around $80 and down 30% below their 52-week high is $104.76, now is an excellent time to own these shares.
Exxon stock has an average analyst 12-month price target of $90, 13% above current levels. Combined with a 73-cent quarterly dividend that yields 3.60% annually, you'll be hard-pressed to find an energy stock with a better combination of value and safety than Exxon Mobil. And I wouldn't bet on these shares getting cheaper after Friday's results are announced.
This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.