Intrinsic value of Exxon Mobil - XOM

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$81.26

  Intrinsic Value

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  Rating & Target

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  Value-price divergence*

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Previous close

$81.26

 
Intrinsic value

$10.30

 
Up/down potential

-87%

 
Rating

str. sell

 
Value-price divergence* premium content

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*Intrinsic value change (in %) minus stock price change (in %) in the past 12 months.

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

Revenue (in 2016), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 330.1

 

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
  2.00
  2.30
  2.57
  2.81
  3.03
  3.23
  3.41
  3.57
  3.71
  3.84
  3.95
  4.06
  4.15
  4.24
  4.31
  4.38
  4.44
  4.50
  4.55
  4.59
  4.64
  4.67
  4.70
  4.73
  4.76
  4.78
  4.81
  4.83
  4.84
  4.86
Revenue, $m
  218,608
  222,980
  228,109
  233,971
  240,553
  247,846
  255,847
  264,561
  273,993
  284,154
  295,059
  306,725
  319,174
  332,428
  346,515
  361,462
  377,303
  394,071
  411,803
  430,538
  450,321
  471,194
  493,207
  516,410
  540,858
  566,606
  593,717
  622,252
  652,279
  683,868
  717,095
Variable operating expenses, $m
 
  157,870
  161,501
  165,652
  170,311
  175,475
  181,140
  187,309
  193,987
  201,181
  208,902
  217,162
  225,975
  235,359
  245,333
  255,915
  267,130
  279,002
  291,556
  304,821
  318,827
  333,605
  349,191
  365,619
  382,927
  401,157
  420,351
  440,554
  461,813
  484,179
  507,704
Fixed operating expenses, $m
 
  66,138
  67,792
  69,486
  71,224
  73,004
  74,829
  76,700
  78,617
  80,583
  82,597
  84,662
  86,779
  88,948
  91,172
  93,451
  95,788
  98,182
  100,637
  103,153
  105,732
  108,375
  111,084
  113,862
  116,708
  119,626
  122,616
  125,682
  128,824
  132,044
  135,346
Total operating expenses, $m
  217,672
  224,008
  229,293
  235,138
  241,535
  248,479
  255,969
  264,009
  272,604
  281,764
  291,499
  301,824
  312,754
  324,307
  336,505
  349,366
  362,918
  377,184
  392,193
  407,974
  424,559
  441,980
  460,275
  479,481
  499,635
  520,783
  542,967
  566,236
  590,637
  616,223
  643,050
Operating income, $m
  936
  -1,028
  -1,184
  -1,167
  -982
  -633
  -122
  552
  1,388
  2,390
  3,560
  4,901
  6,420
  8,121
  10,010
  12,096
  14,385
  16,886
  19,609
  22,564
  25,762
  29,214
  32,932
  36,930
  41,222
  45,823
  50,749
  56,016
  61,642
  67,645
  74,046
EBITDA, $m
  23,244
  21,752
  22,120
  22,736
  23,593
  24,687
  26,016
  27,580
  29,380
  31,420
  33,704
  36,237
  39,027
  42,082
  45,411
  49,023
  52,931
  57,145
  61,680
  66,549
  71,768
  77,352
  83,319
  89,688
  96,478
  103,709
  111,404
  119,586
  128,280
  137,511
  147,306
Interest expense (income), $m
  818
  1,369
  1,485
  1,616
  1,765
  1,934
  2,120
  2,324
  2,546
  2,787
  3,047
  3,325
  3,623
  3,941
  4,279
  4,639
  5,020
  5,425
  5,853
  6,306
  6,784
  7,289
  7,822
  8,384
  8,976
  9,601
  10,258
  10,950
  11,679
  12,445
  13,252
Earnings before tax, $m
  7,969
  -2,397
  -2,669
  -2,783
  -2,748
  -2,567
  -2,242
  -1,772
  -1,158
  -397
  513
  1,576
  2,797
  4,180
  5,731
  7,457
  9,364
  11,461
  13,756
  16,259
  18,978
  21,925
  25,110
  28,546
  32,246
  36,223
  40,491
  45,066
  49,963
  55,200
  60,795
Tax expense, $m
  -406
  0
  0
  0
  0
  0
  0
  0
  0
  0
  139
  426
  755
  1,129
  1,547
  2,013
  2,528
  3,095
  3,714
  4,390
  5,124
  5,920
  6,780
  7,708
  8,706
  9,780
  10,933
  12,168
  13,490
  14,904
  16,415
Net income, $m
  7,840
  -2,397
  -2,669
  -2,783
  -2,748
  -2,567
  -2,242
  -1,772
  -1,158
  -397
  375
  1,151
  2,042
  3,051
  4,184
  5,443
  6,836
  8,367
  10,042
  11,869
  13,854
  16,005
  18,330
  20,839
  23,540
  26,443
  29,558
  32,898
  36,473
  40,296
  44,380

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
  333,304
  340,970
  349,733
  359,571
  370,472
  382,432
  395,457
  409,555
  424,744
  441,045
  458,483
  477,091
  496,903
  517,959
  540,303
  563,981
  589,044
  615,549
  643,555
  673,125
  704,326
  737,230
  771,914
  808,457
  846,945
  887,469
  930,122
  975,005
  1,022,225
  1,071,892
Adjusted assets (=assets-cash), $m
  326,657
  333,304
  340,970
  349,733
  359,571
  370,472
  382,432
  395,457
  409,555
  424,744
  441,045
  458,483
  477,091
  496,903
  517,959
  540,303
  563,981
  589,044
  615,549
  643,555
  673,125
  704,326
  737,230
  771,914
  808,457
  846,945
  887,469
  930,122
  975,005
  1,022,225
  1,071,892
Revenue / Adjusted assets
  0.669
  0.669
  0.669
  0.669
  0.669
  0.669
  0.669
  0.669
  0.669
  0.669
  0.669
  0.669
  0.669
  0.669
  0.669
  0.669
  0.669
  0.669
  0.669
  0.669
  0.669
  0.669
  0.669
  0.669
  0.669
  0.669
  0.669
  0.669
  0.669
  0.669
  0.669
Average production assets, $m
  247,915
  252,860
  258,675
  265,323
  272,787
  281,057
  290,131
  300,012
  310,708
  322,230
  334,597
  347,827
  361,943
  376,974
  392,948
  409,898
  427,862
  446,876
  466,984
  488,231
  510,664
  534,334
  559,297
  585,609
  613,333
  642,532
  673,275
  705,633
  739,684
  775,507
  813,186
Working capital, $m
  -6,222
  4,014
  4,106
  4,211
  4,330
  4,461
  4,605
  4,762
  4,932
  5,115
  5,311
  5,521
  5,745
  5,984
  6,237
  6,506
  6,791
  7,093
  7,412
  7,750
  8,106
  8,481
  8,878
  9,295
  9,735
  10,199
  10,687
  11,201
  11,741
  12,310
  12,908
Total debt, $m
  42,762
  42,425
  46,166
  50,443
  55,243
  60,563
  66,400
  72,756
  79,636
  87,048
  95,003
  103,513
  112,594
  122,262
  132,537
  143,441
  154,995
  167,227
  180,161
  193,828
  208,258
  223,484
  239,541
  256,467
  274,300
  293,082
  312,858
  333,672
  355,576
  378,619
  402,856
Total liabilities, $m
  162,989
  162,652
  166,393
  170,670
  175,470
  180,790
  186,627
  192,983
  199,863
  207,275
  215,230
  223,740
  232,821
  242,489
  252,764
  263,668
  275,222
  287,454
  300,388
  314,055
  328,485
  343,711
  359,768
  376,694
  394,527
  413,309
  433,085
  453,899
  475,803
  498,846
  523,083
Total equity, $m
  167,325
  170,651
  174,576
  179,063
  184,100
  189,681
  195,805
  202,474
  209,692
  217,469
  225,815
  234,744
  244,271
  254,415
  265,195
  276,635
  288,758
  301,591
  315,161
  329,500
  344,640
  360,615
  377,462
  395,220
  413,930
  433,636
  454,384
  476,222
  499,203
  523,379
  548,809
Total liabilities and equity, $m
  330,314
  333,303
  340,969
  349,733
  359,570
  370,471
  382,432
  395,457
  409,555
  424,744
  441,045
  458,484
  477,092
  496,904
  517,959
  540,303
  563,980
  589,045
  615,549
  643,555
  673,125
  704,326
  737,230
  771,914
  808,457
  846,945
  887,469
  930,121
  975,006
  1,022,225
  1,071,892
Debt-to-equity ratio
  0.256
  0.250
  0.260
  0.280
  0.300
  0.320
  0.340
  0.360
  0.380
  0.400
  0.420
  0.440
  0.460
  0.480
  0.500
  0.520
  0.540
  0.550
  0.570
  0.590
  0.600
  0.620
  0.630
  0.650
  0.660
  0.680
  0.690
  0.700
  0.710
  0.720
  0.730
Adjusted equity ratio
  0.512
  0.512
  0.512
  0.512
  0.512
  0.512
  0.512
  0.512
  0.512
  0.512
  0.512
  0.512
  0.512
  0.512
  0.512
  0.512
  0.512
  0.512
  0.512
  0.512
  0.512
  0.512
  0.512
  0.512
  0.512
  0.512
  0.512
  0.512
  0.512
  0.512
  0.512

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  7,840
  -2,397
  -2,669
  -2,783
  -2,748
  -2,567
  -2,242
  -1,772
  -1,158
  -397
  375
  1,151
  2,042
  3,051
  4,184
  5,443
  6,836
  8,367
  10,042
  11,869
  13,854
  16,005
  18,330
  20,839
  23,540
  26,443
  29,558
  32,898
  36,473
  40,296
  44,380
Depreciation, amort., depletion, $m
  22,308
  22,780
  23,304
  23,903
  24,575
  25,320
  26,138
  27,028
  27,992
  29,030
  30,144
  31,336
  32,608
  33,962
  35,401
  36,928
  38,546
  40,259
  42,071
  43,985
  46,006
  48,138
  50,387
  52,758
  55,255
  57,886
  60,655
  63,571
  66,638
  69,865
  73,260
Funds from operations, $m
  20,476
  20,384
  20,635
  21,120
  21,828
  22,754
  23,896
  25,256
  26,834
  28,633
  30,518
  32,486
  34,649
  37,013
  39,584
  42,371
  45,382
  48,626
  52,113
  55,854
  59,860
  64,143
  68,718
  73,596
  78,795
  84,328
  90,214
  96,468
  103,111
  110,161
  117,640
Change in working capital, $m
  -1,606
  79
  92
  106
  118
  131
  144
  157
  170
  183
  196
  210
  224
  239
  254
  269
  285
  302
  319
  337
  356
  376
  396
  418
  440
  463
  488
  514
  540
  569
  598
Cash from operations, $m
  22,082
  16,614
  20,543
  21,015
  21,709
  22,622
  23,752
  25,099
  26,664
  28,450
  30,322
  32,276
  34,425
  36,774
  39,331
  42,102
  45,097
  48,324
  51,794
  55,516
  59,504
  63,767
  68,321
  73,179
  78,355
  83,865
  89,726
  95,955
  102,571
  109,593
  117,042
Maintenance CAPEX, $m
  0
  -22,335
  -22,780
  -23,304
  -23,903
  -24,575
  -25,320
  -26,138
  -27,028
  -27,992
  -29,030
  -30,144
  -31,336
  -32,608
  -33,962
  -35,401
  -36,928
  -38,546
  -40,259
  -42,071
  -43,985
  -46,006
  -48,138
  -50,387
  -52,758
  -55,255
  -57,886
  -60,655
  -63,571
  -66,638
  -69,865
New CAPEX, $m
  -16,163
  -4,945
  -5,816
  -6,648
  -7,464
  -8,270
  -9,074
  -9,881
  -10,696
  -11,523
  -12,366
  -13,230
  -14,117
  -15,030
  -15,974
  -16,951
  -17,963
  -19,015
  -20,108
  -21,246
  -22,433
  -23,671
  -24,963
  -26,313
  -27,723
  -29,199
  -30,743
  -32,359
  -34,051
  -35,823
  -37,680
Cash from investing activities, $m
  -12,403
  -27,280
  -28,596
  -29,952
  -31,367
  -32,845
  -34,394
  -36,019
  -37,724
  -39,515
  -41,396
  -43,374
  -45,453
  -47,638
  -49,936
  -52,352
  -54,891
  -57,561
  -60,367
  -63,317
  -66,418
  -69,677
  -73,101
  -76,700
  -80,481
  -84,454
  -88,629
  -93,014
  -97,622
  -102,461
  -107,545
Free cash flow, $m
  9,679
  -10,665
  -8,053
  -8,937
  -9,657
  -10,223
  -10,642
  -10,920
  -11,060
  -11,065
  -11,074
  -11,097
  -11,027
  -10,864
  -10,605
  -10,249
  -9,794
  -9,237
  -8,573
  -7,801
  -6,914
  -5,909
  -4,780
  -3,521
  -2,126
  -589
  1,097
  2,941
  4,949
  7,132
  9,497
Issuance/(repayment) of debt, $m
  4,293
  3,320
  3,741
  4,276
  4,801
  5,320
  5,837
  6,356
  6,880
  7,412
  7,955
  8,510
  9,081
  9,668
  10,275
  10,903
  11,555
  12,231
  12,935
  13,667
  14,430
  15,226
  16,057
  16,926
  17,833
  18,782
  19,775
  20,815
  21,903
  23,043
  24,237
Issuance/(repurchase) of shares, $m
  -971
  10,672
  8,237
  9,147
  9,893
  10,485
  10,929
  11,232
  11,398
  11,429
  11,465
  11,516
  11,474
  11,339
  11,110
  10,785
  10,362
  9,838
  9,210
  8,473
  7,624
  6,658
  5,569
  4,353
  3,003
  1,513
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  3,160
  13,992
  11,978
  13,423
  14,694
  15,805
  16,766
  17,588
  18,278
  18,841
  19,420
  20,026
  20,555
  21,007
  21,385
  21,688
  21,917
  22,069
  22,145
  22,140
  22,054
  21,884
  21,626
  21,279
  20,836
  20,295
  19,775
  20,815
  21,903
  23,043
  24,237
Total cash flow (excl. dividends), $m
  12,405
  -7,345
  -4,312
  -4,661
  -4,856
  -4,903
  -4,805
  -4,564
  -4,180
  -3,653
  -3,119
  -2,587
  -1,947
  -1,195
  -330
  654
  1,761
  2,995
  4,361
  5,866
  7,516
  9,317
  11,278
  13,405
  15,707
  18,193
  20,873
  23,756
  26,853
  30,175
  33,734
Retained Cash Flow (-), $m
  3,486
  -3,326
  -3,925
  -4,487
  -5,037
  -5,581
  -6,124
  -6,668
  -7,218
  -7,777
  -8,346
  -8,929
  -9,527
  -10,144
  -10,781
  -11,440
  -12,123
  -12,833
  -13,571
  -14,339
  -15,140
  -15,975
  -16,847
  -17,758
  -18,710
  -19,706
  -20,748
  -21,838
  -22,980
  -24,176
  -25,429
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
 
  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
  125
  1,917
  3,872
  5,999
  8,305
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
 
  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
  4
  41
  60
  65
  63
Current shareholders' claim on cash, %
  100
  96.9
  94.6
  92.1
  89.6
  87.1
  84.6
  82.2
  79.9
  77.8
  75.8
  73.9
  72.1
  70.4
  68.9
  67.5
  66.2
  65.1
  64.1
  63.3
  62.5
  61.9
  61.4
  61.1
  60.9
  60.7
  60.7
  60.7
  60.7
  60.7
  60.7

Exxon Mobil Corporation explores for and produces crude oil and natural gas in the United States, Canada/South America, Europe, Africa, Asia, and Australia/Oceania. The company operates through Upstream, Downstream, and Chemical segments. It also manufactures petroleum products; manufactures and markets commodity petrochemicals, including olefins, aromatics, polyethylene, and polypropylene plastics, as well as various specialty product; and transports and sells crude oil, natural gas, and petroleum products. As of December 31, 2016, the company had approximately 35,047 gross and 29,375 net operated wells. Exxon Mobil Corporation was founded in 1870 and is headquartered in Irving, Texas.

FINANCIAL RATIOS  of  Exxon Mobil (XOM)

Valuation Ratios
P/E Ratio 43
Price to Sales 1.5
Price to Book 2
Price to Tangible Book
Price to Cash Flow 15.3
Price to Free Cash Flow 56.9
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 $218608 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 2% 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 70.8%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $64525 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 3.5% 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 113.4%.

Life of production assets of 11.1 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 1.8%. 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 - $167325 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 4062.8 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 $330.1 billion.


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Stock chart of XOM 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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