Exxon Keeps Pumping

NEW YORK ( TheStreet) -- Exxon Mobil ( XOM) keeps pumping oil and we all keep using it so we all have a love/hate relationship with the oil industry.

Low gas prices, a lot of which was due to OPEC countries increasing production, had an effect on profits. But recently the oil prices have been increasing again.

Although, XOM's recent earnings report was nothing to write home about, analysts' projections about the stock's future have the price of the stock inching up again as is evidenced by this hourly trading chart over the last month provided by Barchart:

Since the stock is both a consumer stock with gasoline sales and an industrial stock with industrial chemical production, you'd expect it to perform with the overall market. In fact, the stock is about flat for the last six months while the market as measured by the Value Line Index is still down about 5% for that period:

What's in store for the company?

Exxon Mobil engages in the exploration and production of crude oil and natural gas, and manufacture of petroleum products, as well as transportation and sale of crude oil, natural gas and petroleum products. The company manufactures and markets commodity petrochemicals including olefins, aromatics, polyethylene and polypropylene plastics and other specialty products.

It also has interests in electric power generation facilities. As of Dec. 31, the company operated 37,692 gross and 31,683 net operated wells. Exxon Mobil has a strategic agreement with the Rosneft Oil Company for investment into oil and gas fields in the Russia Federation. The company has operations in the United States, Canada/South America, Europe, Africa, Asia, and Australia/Oceania. Exxon Mobil was incorporated in 1882 and is based in Irving, Texas. (Yahoo Finance profile)

Factors to consider:

Barchart technical indicators:
  • 64% Barchart technical buy signal
  • Trend Spotter buy signal
  • Trading above its 20-, 50- and 100-day moving averages
  • Five new highs and up 1.11% in the last month
  • Relative strength Index 59.50%
  • Barchart computes a technical support level at 84.79
  • Recently traded at 87.30 with a 50-day moving average of 83.50

Fundamental factors:
  • Wall Street has long considered this stock as a long-term conservative income position and 18 brokerage firms have assigned 20 analysts to formulate projections
  • Analysts project revenue will decrease by 3.7% this year and maybe another 0.20% next year
  • Earnings estimates are for a decrease of 9.9% this year but an increase of 4.7% next year and a continued increase of 8.2% annually for the next five years
  • The consensus estimate resulted in four strong buy, seven buy, nine hold and no underperform or sell recommendations to their clients
  • Analysts think investors could look to realize a total annual return in the 12% to 14% range over the next five years
  • The P/E is 11 compared to a market P/E of 14.3
  • The 2.62% dividend rate is about 25% of projected earnings and in line with the market dividend rate of 2.50%
  • The balance sheet rates an A++ score
  • TheStreet rating is B+
  • Although oil usage is down with the economy, oil prices are inching back up
  • The company's production has been down as its present leases mature but expansion into new fields in Russia may bring those production figures back up
  • New industrial chemical production facilities mainly in Saudi Arabia may also increase revenue

Investor interest:
  • The stock is widely followed by both professional and individual investors, and many individual investor websites have a surprising high number of subscribers having this stock on their watch lists
  • This may not be a good time to enter into new positions in this stock but Raymond James, Goldman Sachs, Oppenheimer and UBS continue to encourage clients to maintain their positions for long-term investors
  • Please note that since the beginning of the year short interest has been slowly inching up as oil prices declined

The stock's price held up well against most of its peers. During the last year XOM was up 12% while Chevron ( CVX) was up 7% as was Royal Dutch Shell ( RDS.A). However, BP ( BP) was down 7%:

Projections for competitors:

  • TheStreet rating A
  • Dividend rate 3.26%
  • Revenue to increase 1.7% this year and 3.4% next year
  • Earnings estimated to decrease by 3.9% this year and another 3.2% next year

  • The Street rating C+
  • Dividend rate 4.78%
  • Revenue projected to be down 11.6% this year but up 3.7% next year
  • Earnings estimated to be down 28.6% this year and return upward 3.3% next year

Royal Dutch Shell
  • TheStreet rating B
  • Earnings estimated to increase by 10.71% this year and another 5.35% next year

Conclusion: Exxon Mobil has a place in most long-term conservative portfolios, especially IRAS set up on a dividend reinvestment program, taking advantage of dollar cost average accumulation.

Since the stock has moved up recently, holding may be a better plan than trying to enter into new major positions at this level. As always, I recommend you follow the moving averages and turtle channels to signal weakness and possible new entry levels:

At the time of publication the author had no holdings in the stocks mentioned.

This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.