Energy and especially oil companies are typically cyclical companies and at the moment they are priced very fairly. As you know, I do not currently have any direct oil stock in my portfolio. Yet lately, I find myself more and more looking at such companies. A few weeks ago I bought a few shares of PSX and I already added XOM to my stocks to add list in 2019. So let’s take a deeper look into XOM and decide if it is worth an investment at the moment.

Overview

Exxon Mobil Corporation {XOM) is a manufacturer and marketer of commodity petrochemicals. The company offers several specialty products including olefins, aromatics, polyethylene and polypropylene plastics. XOM includes a few divisions which include ExxonMobil, Exxon, Esso and Mobil. XOM was founded in 1882, and is based in Irving, TX.

Dividend Data

XOM has been paying a dividend since 1911 and increased them since 34 years. This is quite an impressive streak of dividend increases which makes the stock one of the best dividend paying companies. Although XOM has and will have some weaker years it was always to increase its dividend.

Dividend: Currently the company pays a yearly dividend of 3.28 USD which equals a yield of 4.57%. The latest dividend increase was at 6.5%, which is way slightly below my target of 7.5%

Payout Ratio: The current payout ratio is at 71.3%, which is on a high level but a for such a financially healthy company still ok. The next dividend pay data will be in March and the ex-dividend data around the 9th of February.

Stock Price

Looking at the chart of XOM is kind of scary, the price is down by 19.69% from its 52 week high, which makes the stock very cheap. The share price is now more or less on the same level than it was 9 years ago.

Valuation

Price/Earning: The current P/E ratio is currently at 13.16, the 5 year average is at 21.38. So based on the P/E the company seems to be very cheap. Also the forward P/E ratio is way below the 5 year average and is at 15.8.

Price/Book: Similar to the P/E the price/book ratio makes the stock appear to be very cheap. The current P/B ratio is at 1.6 compared to its 5 year average of 2.0.

Free cashflow: The company has enough free cashflow to cover the dividend and to increase the dividend in the upcoming years. In the year 2017 the free cashflow per share was 3.61 USD.

Debt/Equity: The current debt/equity ratio is at 0.11 so as well on very healthy level. The debt level in total is still ok, but it should not increase significantly in the near future. So reducing debt should be also on the focus of the company.

Growth: For 2018 the median EPS expectations are at 4.51 USD per share and for 2019 at 4.53 USD per share. In the upcoming 5 years analysts expect an average yearly growth of 4.2%.

The Finbox Fair Value is at 78.28 USD, which means an upside of 9.1%.

Conclusion

So having a look at the valuation, the price seems to be on a cheap level and is for me definitely a good buying opportunity at the moment. For me one of most important points is that I do not have this company in my portfolio so far. So the current price gives me a good opportunity to finally add that stock to my portfolio.

All in all, I am probably thinking about adding 20 shares of XOM to my fund. This will add 65.6 USD to my annual dividend income.

What do you think about XOM? Is it also on your watch list?