NEW YORK (TheStreet) -- I don't want to nitpick, but you have to work extremely hard to find any disparaging points about Exxon Mobil's (XOM) business, especially when the company is second only to Apple (AAPL) in the race to be the largest company in the world according to market cap.
As much in love as I have been with Chevron (CVX), Exxon has no rival when assessing its ability to convert oil and gas into cash flow and dividends. Not to mention, its impressive history of returns on capital. But the company has been far from flawless.
Lately, Exxon has been dealing with some operational deficiencies, which have worried investors. Not only has management dealt with rising costs, but also energy projects -- which have in the past generated strong returns -- have underperformed. And weak production growth, particularly in North America, has threatened the company's long-term status as an energy power.
On the heels of a weak third-quarter report from rival Royal Dutch Shell (RDS-B), Exxon investors were chewing their nails in anticipation of the numbers the company was going to produce. But Exxon didn't disappoint. The company posted a profit of $7.87 billion, or $1.79 per share, which beat Street estimates by 2 cents. This is despite a slight increase in costs and a 2.4% drop in revenue.
There was some uneasiness about Exxon's revenue decline, which has been a struggle over the past several quarters. But unlike, say, the tech or financial sectors, revenue growth is not as important in the energy sector. The ability to replenish worldwide oil and gas consumption, which is known as "production," is what drives Exxon's earnings. While the company has done relatively well amid what remains a weak oil-priced environment, this quarter's turnaround shouldn't be understated.