Exxon Mobil probably doesn’t need an introduction; it’s the biggest energy company in the world by market cap and is one of the most recognized and prominent in the entire world.
Historic P/E Ratios
Take a look at this chart…
It starts right after the era of stagflation in the 1970s when Exxon Mobil had its P/E ratio driven extremely low. Disregarding that, the company’s long-term average P/E ratio seems to be around 15, quite the same as the overall market. but investors can also see that a P/E ratio of 20 or even 25 is not un-achievable, as it has reached those prices in the past. Both of these projections are higher than the current P/E ratio of 13, with 15 allowing for a 15% share price gain with no increase in net income, and a P/E ratio of 20 allowing for a 50% increase in share price with not movement in net income. Also keep in mind that the forward, or projected, P/E ratio for Exxon Mobil is 12, representing analysts feeling bullish on a gain in net income for the company.
Shareholder Friendly
As always, we as investors have to look at how shareholder friendly the management of the company is, especially if it can sustain dividend streaks for a long time. Exxon Mobil seems to fit the bill, with a dividend streak lasting 31 years, giving it the title of a dividend aristocrat, and an excellent share buyback program. Since 2003, Exxon Mobil has decreased their shares outstanding by over 30%, or 2.5 billion shares. This repurchase program was relatively uninterrupted, save 2009 and an early part of 2010, which were just a result of the aftershocks of the 2008 financial crisis.
Exxon Mobil is a company that is trading at a very low P/E ratio right not compared to historic norms. The company is also shareholder friendly and it should be a great investment going forward. Did I mention that Warren Buffett took a huge stake in the company not too long ago?
Stock Investing Advisor 