Stock Recommendation Report for Exxon

Industry Outlook 

The oil and gas demand increased the market value of chemical-related industries. The natural gas expands the key market value and revenue growth of related companies. Nowadays, the New York regulatory authority increased the prices of gas which increases revenue streams and business opportunities. From several years the U.S oil production companies sweeping the oil and gas sector. The industry from the last few years recorded low prices sales of oil and chemical sales. 

Stock Valuation:

1)      Discounted Cash Flow Method

The value of the stock is calculated through the discounted cash flow method. The terminal value of future cash flows for the year 2022 and 2021 is calculated by previous cash flows. The free cash flows is calculated through adding depreciation and investing activities into net income including Bon-controlling interest. The free cash flows is calculated on the basis of the previous year as 2016 to 2017. This is considering that perpetual growth occur over the period of Exxon company cash flows.

The discount rate is calculated as 6.23 % by discounted cash flows for the year 2022 and 2021. By the previous year, free cash flows the future cash flows is calculated on the discount rate using @ 6.23 %. The future cash flows in discounted of each year by using a discount factor. The present value of future cash is calculated from 2018 to 2021. The net present value is $ 544,562,556,508 is calculated for the year 2022 which is terminal value. 

By calculation, the stock value is calculated as 128.46. Currently, the share of ExxonMobil is traded as $ 80. In 2017 the ExxonMobil financial statements show that share price was decreased over the period from 2013. In 2017 the share price was $ 83. Through the discounted cash flow method the future share price is $ 128.

2)      Ratio Analysis of Stock Recommendation Report for Exxon

Return on Investment

The return on assets increased by 0.03 ratio which means company tends towards acquiring more assets as well as some part of liabilities acquired in 2017. With an increase in revenue streams the ExxonMobil acquire more assets. The return on investment structure is significantly positive that means the company should invest in more profitable projects. The investors are investing in a company for this purpose the capital structure is increased by equity  

Profitability Ratio of Stock Recommendation Report for Exxon

The profit analysis of the company is significantly increased in 2017 as compared to 2016. Which means the company maintained its expenses and increased their revenue streams. The gross profit in 2017 increased by 5 % and net margin is increased by 4 % in 2017 as compared to 2016. The company revenue streams increased as well as operating cost also increased which indicates the operations able to generate more profits in future years.  

 Threats and Competition

The chevron is considered to be the largest competitor of ExxonMobil. According to the New York stock exchange shows that ExxonMobil profit is 18% as Chevron registers 50%. This company ExxonMobil threat over its operations. The reason for huge market share and high-profit margins are a good operating cycle, better performance as well as their high stock value.

Conclusion on Stock Recommendation Report for Exxon

The ExxonMobil financial growth shows that the company in the future will be able to pay high dividends with good payout ratio. As the stock is valued on cash flows basis that company stock price will be approx. $ 128 in 2022. Currently, the share price is traded on $ 80. Also, company ratio analyses both Return on investment and profitability ratios are also very good. So, after analysis, it can be said that Exxon company stock is must buy by current analysis.