Intrinsic value of Exxon Mobil - XOM

Previous Close

$77.64

  Intrinsic Value

$134.65

stock screener

  Rating & Target

str. buy

+73%

Previous close

$77.64

 
Intrinsic value

$134.65

 
Up/down potential

+73%

 
Rating

str. buy

We calculate the intrinsic value of XOM stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Shares outstanding, mln

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2016(a)
   2017
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  -15.75
  26.60
  24.44
  22.50
  20.75
  19.17
  17.75
  16.48
  15.33
  14.30
  13.37
  12.53
  11.78
  11.10
  10.49
  9.94
  9.45
  9.00
  8.60
  8.24
  7.92
  7.63
  7.36
  7.13
  6.91
  6.72
  6.55
  6.40
  6.26
  6.13
  6.02
Revenue, $m
  218,608
  309,364
  384,972
  471,575
  569,410
  678,576
  799,055
  930,732
  1,073,424
  1,226,903
  1,390,919
  1,565,222
  1,749,578
  1,943,790
  2,147,702
  2,361,213
  2,584,283
  2,816,934
  3,059,254
  3,311,399
  3,573,590
  3,846,114
  4,129,321
  4,423,622
  4,729,489
  5,047,450
  5,378,091
  5,722,052
  6,080,026
  6,452,757
  6,841,045
Variable operating expenses, $m
 
  216,864
  269,865
  330,574
  399,157
  475,682
  560,137
  652,443
  752,470
  860,059
  975,034
  1,097,220
  1,226,454
  1,362,597
  1,505,539
  1,655,210
  1,811,582
  1,974,670
  2,144,537
  2,321,291
  2,505,087
  2,696,126
  2,894,654
  3,100,959
  3,315,371
  3,538,262
  3,770,042
  4,011,159
  4,262,098
  4,523,383
  4,795,572
Fixed operating expenses, $m
 
  56,286
  57,524
  58,789
  60,083
  61,405
  62,756
  64,136
  65,547
  66,989
  68,463
  69,969
  71,508
  73,082
  74,689
  76,333
  78,012
  79,728
  81,482
  83,275
  85,107
  86,979
  88,893
  90,848
  92,847
  94,890
  96,977
  99,111
  101,291
  103,520
  105,797
Total operating expenses, $m
  217,672
  273,150
  327,389
  389,363
  459,240
  537,087
  622,893
  716,579
  818,017
  927,048
  1,043,497
  1,167,189
  1,297,962
  1,435,679
  1,580,228
  1,731,543
  1,889,594
  2,054,398
  2,226,019
  2,404,566
  2,590,194
  2,783,105
  2,983,547
  3,191,807
  3,408,218
  3,633,152
  3,867,019
  4,110,270
  4,363,389
  4,626,903
  4,901,369
Operating income, $m
  936
  36,214
  57,583
  82,212
  110,171
  141,490
  176,162
  214,153
  255,407
  299,855
  347,422
  398,032
  451,615
  508,112
  567,473
  629,670
  694,689
  762,535
  833,235
  906,833
  983,397
  1,063,009
  1,145,774
  1,231,815
  1,321,270
  1,414,298
  1,511,072
  1,611,783
  1,716,636
  1,825,855
  1,939,675
EBITDA, $m
  23,244
  61,384
  88,904
  120,579
  156,498
  196,699
  241,173
  289,877
  342,740
  399,676
  460,587
  525,379
  593,961
  666,258
  742,210
  821,778
  904,946
  991,721
  1,082,136
  1,176,249
  1,274,144
  1,375,929
  1,481,736
  1,591,720
  1,706,061
  1,824,958
  1,948,634
  2,077,329
  2,211,307
  2,350,851
  2,496,263
Interest expense (income), $m
  818
  2,286
  4,602
  7,293
  10,375
  13,857
  17,742
  22,030
  26,716
  31,794
  37,256
  43,094
  49,297
  55,858
  62,770
  70,027
  77,626
  85,564
  93,844
  102,468
  111,442
  120,773
  130,472
  140,551
  151,025
  161,911
  173,226
  184,994
  197,235
  209,975
  223,240
Earnings before tax, $m
  7,969
  33,928
  52,981
  74,919
  99,796
  127,633
  158,420
  192,123
  228,691
  268,061
  310,165
  354,939
  402,319
  452,254
  504,704
  559,643
  617,063
  676,971
  739,390
  804,365
  871,955
  942,236
  1,015,302
  1,091,264
  1,170,245
  1,252,387
  1,337,846
  1,426,789
  1,519,401
  1,615,880
  1,716,435
Tax expense, $m
  -406
  9,161
  14,305
  20,228
  26,945
  34,461
  42,773
  51,873
  61,747
  72,376
  83,745
  95,833
  108,626
  122,108
  136,270
  151,104
  166,607
  182,782
  199,635
  217,179
  235,428
  254,404
  274,132
  294,641
  315,966
  338,145
  361,218
  385,233
  410,238
  436,288
  463,438
Net income, $m
  7,840
  24,767
  38,676
  54,691
  72,851
  93,172
  115,646
  140,250
  166,944
  195,684
  226,421
  259,105
  293,693
  330,145
  368,434
  408,540
  450,456
  494,188
  539,755
  587,187
  636,527
  687,832
  741,171
  796,622
  854,279
  914,243
  976,627
  1,041,556
  1,109,163
  1,179,592
  1,252,998

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  3,657
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  330,314
  441,317
  549,175
  672,718
  812,283
  968,012
  1,139,878
  1,327,720
  1,531,276
  1,750,219
  1,984,193
  2,232,841
  2,495,832
  2,772,882
  3,063,769
  3,368,350
  3,686,566
  4,018,450
  4,364,128
  4,723,822
  5,097,846
  5,486,611
  5,890,615
  6,310,445
  6,746,774
  7,200,357
  7,672,027
  8,162,699
  8,673,360
  9,205,075
  9,758,980
Adjusted assets (=assets-cash), $m
  326,657
  441,317
  549,175
  672,718
  812,283
  968,012
  1,139,878
  1,327,720
  1,531,276
  1,750,219
  1,984,193
  2,232,841
  2,495,832
  2,772,882
  3,063,769
  3,368,350
  3,686,566
  4,018,450
  4,364,128
  4,723,822
  5,097,846
  5,486,611
  5,890,615
  6,310,445
  6,746,774
  7,200,357
  7,672,027
  8,162,699
  8,673,360
  9,205,075
  9,758,980
Revenue / Adjusted assets
  0.669
  0.701
  0.701
  0.701
  0.701
  0.701
  0.701
  0.701
  0.701
  0.701
  0.701
  0.701
  0.701
  0.701
  0.701
  0.701
  0.701
  0.701
  0.701
  0.701
  0.701
  0.701
  0.701
  0.701
  0.701
  0.701
  0.701
  0.701
  0.701
  0.701
  0.701
Average production assets, $m
  247,915
  314,623
  391,517
  479,592
  579,090
  690,112
  812,638
  946,554
  1,091,672
  1,247,761
  1,414,565
  1,591,831
  1,779,321
  1,976,834
  2,184,213
  2,401,354
  2,628,216
  2,864,821
  3,111,261
  3,367,693
  3,634,341
  3,911,498
  4,199,519
  4,498,823
  4,809,890
  5,133,257
  5,469,519
  5,819,327
  6,183,386
  6,562,454
  6,957,343
Working capital, $m
  -6,222
  5,259
  6,545
  8,017
  9,680
  11,536
  13,584
  15,822
  18,248
  20,857
  23,646
  26,609
  29,743
  33,044
  36,511
  40,141
  43,933
  47,888
  52,007
  56,294
  60,751
  65,384
  70,198
  75,202
  80,401
  85,807
  91,428
  97,275
  103,360
  109,697
  116,298
Total debt, $m
  42,762
  85,222
  135,052
  192,129
  256,608
  328,554
  407,957
  494,740
  588,782
  689,934
  798,030
  912,906
  1,034,407
  1,162,404
  1,296,794
  1,437,511
  1,584,527
  1,737,857
  1,897,560
  2,063,739
  2,236,538
  2,416,147
  2,602,797
  2,796,759
  2,998,343
  3,207,898
  3,425,810
  3,652,500
  3,888,426
  4,134,078
  4,389,982
Total liabilities, $m
  162,989
  203,889
  253,719
  310,796
  375,275
  447,221
  526,624
  613,407
  707,449
  808,601
  916,697
  1,031,573
  1,153,074
  1,281,071
  1,415,461
  1,556,178
  1,703,194
  1,856,524
  2,016,227
  2,182,406
  2,355,205
  2,534,814
  2,721,464
  2,915,426
  3,117,010
  3,326,565
  3,544,477
  3,771,167
  4,007,093
  4,252,745
  4,508,649
Total equity, $m
  167,325
  237,429
  295,456
  361,922
  437,008
  520,790
  613,254
  714,313
  823,826
  941,618
  1,067,496
  1,201,269
  1,342,758
  1,491,810
  1,648,308
  1,812,172
  1,983,373
  2,161,926
  2,347,901
  2,541,416
  2,742,641
  2,951,797
  3,169,151
  3,395,019
  3,629,764
  3,873,792
  4,127,551
  4,391,532
  4,666,268
  4,952,330
  5,250,331
Total liabilities and equity, $m
  330,314
  441,318
  549,175
  672,718
  812,283
  968,011
  1,139,878
  1,327,720
  1,531,275
  1,750,219
  1,984,193
  2,232,842
  2,495,832
  2,772,881
  3,063,769
  3,368,350
  3,686,567
  4,018,450
  4,364,128
  4,723,822
  5,097,846
  5,486,611
  5,890,615
  6,310,445
  6,746,774
  7,200,357
  7,672,028
  8,162,699
  8,673,361
  9,205,075
  9,758,980
Debt-to-equity ratio
  0.256
  0.360
  0.460
  0.530
  0.590
  0.630
  0.670
  0.690
  0.710
  0.730
  0.750
  0.760
  0.770
  0.780
  0.790
  0.790
  0.800
  0.800
  0.810
  0.810
  0.820
  0.820
  0.820
  0.820
  0.830
  0.830
  0.830
  0.830
  0.830
  0.830
  0.840
Adjusted equity ratio
  0.512
  0.538
  0.538
  0.538
  0.538
  0.538
  0.538
  0.538
  0.538
  0.538
  0.538
  0.538
  0.538
  0.538
  0.538
  0.538
  0.538
  0.538
  0.538
  0.538
  0.538
  0.538
  0.538
  0.538
  0.538
  0.538
  0.538
  0.538
  0.538
  0.538
  0.538

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  7,840
  24,767
  38,676
  54,691
  72,851
  93,172
  115,646
  140,250
  166,944
  195,684
  226,421
  259,105
  293,693
  330,145
  368,434
  408,540
  450,456
  494,188
  539,755
  587,187
  636,527
  687,832
  741,171
  796,622
  854,279
  914,243
  976,627
  1,041,556
  1,109,163
  1,179,592
  1,252,998
Depreciation, amort., depletion, $m
  22,308
  25,170
  31,321
  38,367
  46,327
  55,209
  65,011
  75,724
  87,334
  99,821
  113,165
  127,346
  142,346
  158,147
  174,737
  192,108
  210,257
  229,186
  248,901
  269,415
  290,747
  312,920
  335,962
  359,906
  384,791
  410,661
  437,562
  465,546
  494,671
  524,996
  556,587
Funds from operations, $m
  20,476
  49,937
  69,997
  93,058
  119,178
  148,381
  180,658
  215,974
  254,278
  295,505
  339,586
  386,452
  436,038
  488,292
  543,171
  600,648
  660,713
  723,374
  788,656
  856,602
  927,274
  1,000,752
  1,077,132
  1,156,528
  1,239,070
  1,324,903
  1,414,189
  1,507,102
  1,603,834
  1,704,589
  1,809,585
Change in working capital, $m
  -1,606
  1,105
  1,285
  1,472
  1,663
  1,856
  2,048
  2,239
  2,426
  2,609
  2,788
  2,963
  3,134
  3,302
  3,467
  3,630
  3,792
  3,955
  4,119
  4,286
  4,457
  4,633
  4,815
  5,003
  5,200
  5,405
  5,621
  5,847
  6,086
  6,336
  6,601
Cash from operations, $m
  22,082
  48,832
  68,712
  91,586
  117,515
  146,525
  178,609
  213,736
  251,852
  292,896
  336,798
  383,488
  432,904
  484,990
  539,704
  597,018
  656,921
  719,419
  784,536
  852,316
  922,817
  996,119
  1,072,318
  1,151,525
  1,233,870
  1,319,498
  1,408,568
  1,501,255
  1,597,748
  1,698,252
  1,802,984
Maintenance CAPEX, $m
  0
  -19,874
  -25,170
  -31,321
  -38,367
  -46,327
  -55,209
  -65,011
  -75,724
  -87,334
  -99,821
  -113,165
  -127,346
  -142,346
  -158,147
  -174,737
  -192,108
  -210,257
  -229,186
  -248,901
  -269,415
  -290,747
  -312,920
  -335,962
  -359,906
  -384,791
  -410,661
  -437,562
  -465,546
  -494,671
  -524,996
New CAPEX, $m
  -16,163
  -66,196
  -76,894
  -88,076
  -99,498
  -111,022
  -122,527
  -133,916
  -145,118
  -156,088
  -166,804
  -177,266
  -187,491
  -197,513
  -207,378
  -217,141
  -226,862
  -236,606
  -246,440
  -256,432
  -266,649
  -277,157
  -288,021
  -299,304
  -311,066
  -323,367
  -336,262
  -349,808
  -364,059
  -379,068
  -394,888
Cash from investing activities, $m
  -12,403
  -86,070
  -102,064
  -119,397
  -137,865
  -157,349
  -177,736
  -198,927
  -220,842
  -243,422
  -266,625
  -290,431
  -314,837
  -339,859
  -365,525
  -391,878
  -418,970
  -446,863
  -475,626
  -505,333
  -536,064
  -567,904
  -600,941
  -635,266
  -670,972
  -708,158
  -746,923
  -787,370
  -829,605
  -873,739
  -919,884
Free cash flow, $m
  9,679
  -37,238
  -33,352
  -27,811
  -20,350
  -10,824
  874
  14,809
  31,010
  49,474
  70,173
  93,058
  118,067
  145,131
  174,179
  205,140
  237,951
  272,556
  308,911
  346,983
  386,753
  428,215
  471,377
  516,259
  562,898
  611,340
  661,645
  713,885
  768,143
  824,513
  883,100
Issuance/(repayment) of debt, $m
  4,293
  42,886
  49,830
  57,077
  64,479
  71,947
  79,402
  86,783
  94,043
  101,152
  108,096
  114,875
  121,502
  127,997
  134,390
  140,716
  147,016
  153,330
  159,703
  166,178
  172,799
  179,609
  186,650
  193,962
  201,584
  209,555
  217,912
  226,690
  235,926
  245,652
  255,904
Issuance/(repurchase) of shares, $m
  -971
  24,973
  19,352
  11,775
  2,235
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  3,160
  67,859
  69,182
  68,852
  66,714
  71,947
  79,402
  86,783
  94,043
  101,152
  108,096
  114,875
  121,502
  127,997
  134,390
  140,716
  147,016
  153,330
  159,703
  166,178
  172,799
  179,609
  186,650
  193,962
  201,584
  209,555
  217,912
  226,690
  235,926
  245,652
  255,904
Total cash flow (excl. dividends), $m
  12,405
  30,621
  35,830
  41,041
  46,363
  61,123
  80,276
  101,592
  125,052
  150,626
  178,269
  207,933
  239,569
  273,128
  308,569
  345,857
  384,967
  425,887
  468,614
  513,161
  559,552
  607,824
  658,026
  710,221
  764,482
  820,895
  879,557
  940,575
  1,004,069
  1,070,165
  1,139,004
Retained Cash Flow (-), $m
  3,486
  -49,741
  -58,028
  -66,466
  -75,086
  -83,782
  -92,464
  -101,059
  -109,513
  -117,791
  -125,878
  -133,773
  -141,489
  -149,053
  -156,497
  -163,865
  -171,200
  -178,554
  -185,975
  -193,515
  -201,225
  -209,155
  -217,354
  -225,869
  -234,745
  -244,027
  -253,759
  -263,981
  -274,736
  -286,062
  -298,001
Prev. year cash balance distribution, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
 
  -19,119
  -22,197
  -25,425
  -28,723
  -22,659
  -12,188
  533
  15,539
  32,834
  52,391
  74,160
  98,080
  124,076
  152,072
  181,992
  213,767
  247,333
  282,640
  319,646
  358,327
  398,669
  440,672
  484,352
  529,737
  576,868
  625,798
  676,594
  729,333
  784,103
  841,003
Discount rate, %
 
  4.30
  4.52
  4.74
  4.98
  5.23
  5.49
  5.76
  6.05
  6.35
  6.67
  7.00
  7.35
  7.72
  8.11
  8.51
  8.94
  9.39
  9.86
  10.35
  10.87
  11.41
  11.98
  12.58
  13.21
  13.87
  14.56
  15.29
  16.05
  16.86
  17.70
PV of cash for distribution, $m
 
  -18,331
  -20,321
  -22,127
  -23,650
  -17,564
  -8,845
  360
  9,713
  18,862
  27,466
  35,218
  41,854
  47,176
  51,053
  53,430
  54,323
  53,816
  52,051
  49,216
  45,532
  41,236
  36,564
  31,745
  26,981
  22,441
  18,258
  14,522
  11,284
  8,559
  6,332
Current shareholders' claim on cash, %
  100
  92.9
  88.8
  86.8
  86.5
  86.5
  86.5
  86.5
  86.5
  86.5
  86.5
  86.5
  86.5
  86.5
  86.5
  86.5
  86.5
  86.5
  86.5
  86.5
  86.5
  86.5
  86.5
  86.5
  86.5
  86.5
  86.5
  86.5
  86.5
  86.5
  86.5

Exxon Mobil Corporation is engaged in energy business. The Company is engaged in the exploration, production, transportation and sale of crude oil and natural gas, and the manufacture, transportation and sale of petroleum products. The Company also manufactures and markets commodity petrochemicals, including olefins, aromatics, polyethylene and polypropylene plastics, and a range of specialty products. The Company's segments include Upstream, Downstream, Chemical, and Corporate and Financing. The Upstream segment operates to explore for and produce crude oil and natural gas. The Downstream operates to manufacture and sell petroleum products. The Chemical segment operates to manufacture and sell petrochemicals. The Company has exploration and development activities in projects located in the United States, Canada/South America, Europe, Africa, Asia and Australia/Oceania.

FINANCIAL RATIOS  of  Exxon Mobil (XOM)

Valuation Ratios
P/E Ratio 41.1
Price to Sales 1.5
Price to Book 1.9
Price to Tangible Book
Price to Cash Flow 14.6
Price to Free Cash Flow 54.4
Growth Rates
Sales Growth Rate -15.8%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -39%
Cap. Spend. - 3 Yr. Gr. Rate -13.7%
Financial Strength
Quick Ratio 0
Current Ratio 0
LT Debt to Equity 17.3%
Total Debt to Equity 25.6%
Interest Coverage 11
Management Effectiveness
Return On Assets 2.6%
Ret/ On Assets - 3 Yr. Avg. 5.6%
Return On Total Capital 3.7%
Ret/ On T. Cap. - 3 Yr. Avg. 9.3%
Return On Equity 4.6%
Return On Equity - 3 Yr. Avg. 10.9%
Asset Turnover 0.7
Profitability Ratios
Gross Margin 28.1%
Gross Margin - 3 Yr. Avg. 26.8%
EBITDA Margin 14.2%
EBITDA Margin - 3 Yr. Avg. 15.8%
Operating Margin 0.4%
Oper. Margin - 3 Yr. Avg. 4.7%
Pre-Tax Margin 3.6%
Pre-Tax Margin - 3 Yr. Avg. 8.4%
Net Profit Margin 3.6%
Net Profit Margin - 3 Yr. Avg. 6%
Effective Tax Rate -5.1%
Eff/ Tax Rate - 3 Yr. Avg. 18.1%
Payout Ratio 158.8%

XOM stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the XOM stock intrinsic value calculation we used $244363 million for the last fiscal year's total revenue generated by Exxon Mobil. The default revenue input number comes from 2016 income statement of Exxon Mobil. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our XOM stock valuation model: a) initial revenue growth rate of 26.6% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 4.3%, whose default value for XOM is calculated based on our internal credit rating of Exxon Mobil, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of Exxon Mobil.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of XOM stock the variable cost ratio is equal to 70.1%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $55074 million in the base year in the intrinsic value calculation for XOM stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 5.4% for Exxon Mobil.

Corporate tax rate of 27% is the nominal tax rate for Exxon Mobil. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the XOM stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for XOM are equal to 101.7%.

Life of production assets of 12.5 years is the average useful life of capital assets used in Exxon Mobil operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for XOM is equal to 1.7%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $187688 million for Exxon Mobil - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 4234 million for Exxon Mobil is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of Exxon Mobil at the current share price and the inputted number of shares is $328.7 billion.

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Financial statements of XOM
Valuation of Stocks

The paper VALUATION OF STOCKS: The Quest for Intrinsic Value provides a detailed description of our valuation model and discloses the calculation algorithm.

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