Intrinsic value of Exxon Mobil - XOM

Previous Close

$77.53

  Intrinsic Value

$22.01

stock screener

  Rating & Target

str. sell

-72%

Previous close

$77.53

 
Intrinsic value

$22.01

 
Up/down potential

-72%

 
Rating

str. sell

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
  13.50
  12.65
  11.89
  11.20
  10.58
  10.02
  9.52
  9.07
  8.66
  8.29
  7.96
  7.67
  7.40
  7.16
  6.94
  6.75
  6.58
  6.42
  6.28
  6.15
  6.03
  5.93
  5.84
  5.75
  5.68
  5.61
  5.55
  5.49
  5.44
  5.40
Revenue, $m
  218,608
  248,120
  279,507
  312,727
  347,741
  384,521
  423,047
  463,309
  505,311
  549,066
  594,600
  641,953
  691,174
  742,325
  795,480
  850,722
  908,146
  967,858
  1,029,971
  1,094,609
  1,161,909
  1,232,011
  1,305,070
  1,381,248
  1,460,716
  1,543,656
  1,630,258
  1,720,724
  1,815,265
  1,914,104
  2,017,472
Variable operating expenses, $m
 
  175,669
  197,891
  221,411
  246,201
  272,241
  299,517
  328,023
  357,760
  388,738
  420,977
  454,502
  489,351
  525,566
  563,200
  602,311
  642,968
  685,243
  729,219
  774,984
  822,631
  872,264
  923,990
  977,923
  1,034,187
  1,092,908
  1,154,223
  1,218,273
  1,285,208
  1,355,185
  1,428,370
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
  241,807
  265,683
  290,897
  317,425
  345,245
  374,346
  404,723
  436,377
  469,321
  503,574
  539,164
  576,130
  614,514
  654,372
  695,762
  738,756
  783,425
  829,856
  878,137
  928,363
  980,639
  1,035,074
  1,091,785
  1,150,895
  1,212,534
  1,276,839
  1,343,955
  1,414,032
  1,487,229
  1,563,716
Operating income, $m
  936
  6,313
  13,825
  21,830
  30,317
  39,276
  48,701
  58,586
  68,933
  79,744
  91,026
  102,788
  115,044
  127,810
  141,108
  154,959
  169,391
  184,432
  200,114
  216,473
  233,546
  251,372
  269,996
  289,463
  309,821
  331,122
  353,419
  376,770
  401,234
  426,874
  453,756
EBITDA, $m
  23,244
  31,661
  42,380
  53,779
  65,843
  78,560
  91,920
  105,919
  120,557
  135,838
  151,771
  168,371
  185,656
  203,648
  222,376
  241,871
  262,169
  283,310
  305,338
  328,301
  352,249
  377,237
  403,325
  430,574
  459,051
  488,825
  519,970
  552,563
  586,685
  622,423
  659,866
Interest expense (income), $m
  818
  1,369
  2,127
  2,928
  3,776
  4,670
  5,609
  6,593
  7,621
  8,693
  9,810
  10,973
  12,182
  13,438
  14,744
  16,101
  17,512
  18,978
  20,502
  22,088
  23,738
  25,456
  27,246
  29,111
  31,056
  33,085
  35,203
  37,414
  39,723
  42,137
  44,660
Earnings before tax, $m
  7,969
  4,944
  11,698
  18,902
  26,541
  34,606
  43,091
  51,994
  61,313
  71,051
  81,216
  91,815
  102,862
  114,372
  126,364
  138,858
  151,880
  165,454
  179,612
  194,385
  209,807
  225,916
  242,750
  260,352
  278,765
  298,037
  318,216
  339,356
  361,510
  384,737
  409,096
Tax expense, $m
  -406
  1,335
  3,158
  5,103
  7,166
  9,344
  11,635
  14,038
  16,554
  19,184
  21,928
  24,790
  27,773
  30,881
  34,118
  37,492
  41,007
  44,673
  48,495
  52,484
  56,648
  60,997
  65,543
  70,295
  75,266
  80,470
  85,918
  91,626
  97,608
  103,879
  110,456
Net income, $m
  7,840
  3,609
  8,539
  13,798
  19,375
  25,262
  31,457
  37,955
  44,758
  51,867
  59,287
  67,025
  75,089
  83,492
  92,246
  101,367
  110,872
  120,782
  131,117
  141,901
  153,159
  164,919
  177,208
  190,057
  203,498
  217,567
  232,298
  247,730
  263,903
  280,858
  298,640

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
  370,882
  417,799
  467,454
  519,792
  574,770
  632,357
  692,540
  755,323
  820,726
  888,789
  959,570
  1,033,144
  1,109,604
  1,189,058
  1,271,632
  1,357,469
  1,446,723
  1,539,567
  1,636,188
  1,736,784
  1,841,571
  1,950,778
  2,064,645
  2,183,432
  2,307,407
  2,436,858
  2,572,084
  2,713,401
  2,861,142
  3,015,653
Adjusted assets (=assets-cash), $m
  326,657
  370,882
  417,799
  467,454
  519,792
  574,770
  632,357
  692,540
  755,323
  820,726
  888,789
  959,570
  1,033,144
  1,109,604
  1,189,058
  1,271,632
  1,357,469
  1,446,723
  1,539,567
  1,636,188
  1,736,784
  1,841,571
  1,950,778
  2,064,645
  2,183,432
  2,307,407
  2,436,858
  2,572,084
  2,713,401
  2,861,142
  3,015,653
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
  281,368
  316,961
  354,632
  394,338
  436,047
  479,735
  525,393
  573,023
  622,640
  674,276
  727,974
  783,791
  841,797
  902,074
  964,719
  1,029,838
  1,097,551
  1,167,987
  1,241,287
  1,317,604
  1,397,101
  1,479,950
  1,566,335
  1,656,452
  1,750,505
  1,848,712
  1,951,301
  2,058,511
  2,170,594
  2,287,813
Working capital, $m
  -6,222
  4,466
  5,031
  5,629
  6,259
  6,921
  7,615
  8,340
  9,096
  9,883
  10,703
  11,555
  12,441
  13,362
  14,319
  15,313
  16,347
  17,421
  18,539
  19,703
  20,914
  22,176
  23,491
  24,862
  26,293
  27,786
  29,345
  30,973
  32,675
  34,454
  36,314
Total debt, $m
  42,762
  60,763
  83,659
  107,891
  133,432
  160,261
  188,363
  217,733
  248,370
  280,287
  313,502
  348,043
  383,947
  421,260
  460,033
  500,330
  542,218
  585,774
  631,082
  678,233
  727,324
  778,460
  831,752
  887,320
  945,288
  1,005,788
  1,068,960
  1,134,950
  1,203,913
  1,276,010
  1,351,412
Total liabilities, $m
  162,989
  180,990
  203,886
  228,118
  253,659
  280,488
  308,590
  337,960
  368,597
  400,514
  433,729
  468,270
  504,174
  541,487
  580,260
  620,557
  662,445
  706,001
  751,309
  798,460
  847,551
  898,687
  951,979
  1,007,547
  1,065,515
  1,126,015
  1,189,187
  1,255,177
  1,324,140
  1,396,237
  1,471,639
Total equity, $m
  167,325
  189,892
  213,913
  239,336
  266,134
  294,282
  323,767
  354,581
  386,725
  420,212
  455,060
  491,300
  528,970
  568,117
  608,798
  651,076
  695,024
  740,722
  788,258
  837,728
  889,233
  942,884
  998,798
  1,057,098
  1,117,917
  1,181,393
  1,247,671
  1,316,907
  1,389,261
  1,464,904
  1,544,015
Total liabilities and equity, $m
  330,314
  370,882
  417,799
  467,454
  519,793
  574,770
  632,357
  692,541
  755,322
  820,726
  888,789
  959,570
  1,033,144
  1,109,604
  1,189,058
  1,271,633
  1,357,469
  1,446,723
  1,539,567
  1,636,188
  1,736,784
  1,841,571
  1,950,777
  2,064,645
  2,183,432
  2,307,408
  2,436,858
  2,572,084
  2,713,401
  2,861,141
  3,015,654
Debt-to-equity ratio
  0.256
  0.320
  0.390
  0.450
  0.500
  0.540
  0.580
  0.610
  0.640
  0.670
  0.690
  0.710
  0.730
  0.740
  0.760
  0.770
  0.780
  0.790
  0.800
  0.810
  0.820
  0.830
  0.830
  0.840
  0.850
  0.850
  0.860
  0.860
  0.870
  0.870
  0.880
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
  3,609
  8,539
  13,798
  19,375
  25,262
  31,457
  37,955
  44,758
  51,867
  59,287
  67,025
  75,089
  83,492
  92,246
  101,367
  110,872
  120,782
  131,117
  141,901
  153,159
  164,919
  177,208
  190,057
  203,498
  217,567
  232,298
  247,730
  263,903
  280,858
  298,640
Depreciation, amort., depletion, $m
  22,308
  25,348
  28,555
  31,949
  35,526
  39,284
  43,219
  47,333
  51,624
  56,094
  60,746
  65,583
  70,612
  75,838
  81,268
  86,912
  92,778
  98,878
  105,224
  111,828
  118,703
  125,865
  133,329
  141,111
  149,230
  157,703
  166,551
  175,793
  185,451
  195,549
  206,109
Funds from operations, $m
  20,476
  28,958
  37,094
  45,747
  54,901
  64,546
  74,676
  85,288
  96,382
  107,961
  120,033
  132,608
  145,701
  159,329
  173,514
  188,278
  203,650
  219,660
  236,341
  253,729
  271,863
  290,784
  310,536
  331,168
  352,728
  375,270
  398,849
  423,523
  449,354
  476,407
  504,749
Change in working capital, $m
  -1,606
  531
  565
  598
  630
  662
  693
  725
  756
  788
  820
  852
  886
  921
  957
  994
  1,034
  1,075
  1,118
  1,164
  1,211
  1,262
  1,315
  1,371
  1,430
  1,493
  1,559
  1,628
  1,702
  1,779
  1,861
Cash from operations, $m
  22,082
  28,427
  36,530
  45,149
  54,270
  63,884
  73,983
  84,563
  95,626
  107,174
  119,213
  131,756
  144,815
  158,409
  172,557
  187,284
  202,617
  218,585
  235,223
  252,565
  270,651
  289,522
  309,221
  329,797
  351,298
  373,777
  397,290
  421,894
  447,652
  474,628
  502,889
Maintenance CAPEX, $m
  0
  -22,335
  -25,348
  -28,555
  -31,949
  -35,526
  -39,284
  -43,219
  -47,333
  -51,624
  -56,094
  -60,746
  -65,583
  -70,612
  -75,838
  -81,268
  -86,912
  -92,778
  -98,878
  -105,224
  -111,828
  -118,703
  -125,865
  -133,329
  -141,111
  -149,230
  -157,703
  -166,551
  -175,793
  -185,451
  -195,549
New CAPEX, $m
  -16,163
  -33,454
  -35,593
  -37,671
  -39,706
  -41,709
  -43,688
  -45,658
  -47,630
  -49,618
  -51,636
  -53,698
  -55,817
  -58,006
  -60,278
  -62,645
  -65,119
  -67,713
  -70,436
  -73,301
  -76,317
  -79,496
  -82,849
  -86,385
  -90,117
  -94,054
  -98,207
  -102,589
  -107,210
  -112,083
  -117,220
Cash from investing activities, $m
  -12,403
  -55,789
  -60,941
  -66,226
  -71,655
  -77,235
  -82,972
  -88,877
  -94,963
  -101,242
  -107,730
  -114,444
  -121,400
  -128,618
  -136,116
  -143,913
  -152,031
  -160,491
  -169,314
  -178,525
  -188,145
  -198,199
  -208,714
  -219,714
  -231,228
  -243,284
  -255,910
  -269,140
  -283,003
  -297,534
  -312,769
Free cash flow, $m
  9,679
  -27,362
  -24,412
  -21,077
  -17,385
  -13,351
  -8,989
  -4,314
  664
  5,932
  11,484
  17,313
  23,415
  29,791
  36,442
  43,371
  50,586
  58,095
  65,909
  74,041
  82,506
  91,322
  100,507
  110,082
  120,070
  130,494
  141,379
  152,755
  164,650
  177,094
  190,120
Issuance/(repayment) of debt, $m
  4,293
  21,658
  22,895
  24,232
  25,541
  26,829
  28,103
  29,369
  30,638
  31,917
  33,215
  34,541
  35,904
  37,312
  38,774
  40,296
  41,888
  43,556
  45,308
  47,151
  49,091
  51,136
  53,293
  55,568
  57,968
  60,500
  63,172
  65,990
  68,963
  72,097
  75,402
Issuance/(repurchase) of shares, $m
  -971
  18,957
  15,482
  11,625
  7,423
  2,886
  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
  40,615
  38,377
  35,857
  32,964
  29,715
  28,103
  29,369
  30,638
  31,917
  33,215
  34,541
  35,904
  37,312
  38,774
  40,296
  41,888
  43,556
  45,308
  47,151
  49,091
  51,136
  53,293
  55,568
  57,968
  60,500
  63,172
  65,990
  68,963
  72,097
  75,402
Total cash flow (excl. dividends), $m
  12,405
  13,254
  13,965
  14,780
  15,579
  16,365
  19,113
  25,056
  31,301
  37,849
  44,699
  51,854
  59,319
  67,103
  75,215
  83,667
  92,474
  101,651
  111,217
  121,191
  131,597
  142,458
  153,800
  165,650
  178,037
  190,994
  204,551
  218,745
  233,612
  249,191
  265,522
Retained Cash Flow (-), $m
  3,486
  -22,567
  -24,021
  -25,424
  -26,797
  -28,149
  -29,485
  -30,814
  -32,145
  -33,486
  -34,848
  -36,240
  -37,670
  -39,147
  -40,681
  -42,278
  -43,948
  -45,698
  -47,536
  -49,470
  -51,505
  -53,651
  -55,914
  -58,300
  -60,819
  -63,475
  -66,279
  -69,236
  -72,354
  -75,643
  -79,110
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
 
  -9,313
  -10,056
  -10,643
  -11,218
  -11,784
  -10,371
  -5,758
  -843
  4,362
  9,850
  15,614
  21,650
  27,956
  34,535
  41,389
  48,526
  55,952
  63,680
  71,722
  80,092
  88,807
  97,886
  107,350
  117,219
  127,518
  138,273
  149,510
  161,258
  173,548
  186,412
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
 
  -8,929
  -9,206
  -9,262
  -9,237
  -9,134
  -7,527
  -3,890
  -527
  2,506
  5,164
  7,415
  9,239
  10,629
  11,594
  12,151
  12,331
  12,174
  11,727
  11,043
  10,177
  9,186
  8,122
  7,036
  5,970
  4,961
  4,034
  3,209
  2,495
  1,894
  1,404
Current shareholders' claim on cash, %
  100
  94.6
  90.8
  88.4
  87.0
  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
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 54.3
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 13.5% 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 4256.34 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 $330.0 billion.

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COMPANY NEWS

▶ EU warns Turkey after its warships force gas rig to halt   [Feb-23-18 03:18PM  Associated Press]
▶ 52-Week Company Lows   [10:37AM  GuruFocus.com]
▶ ExxonMobil Acquires 2.5% Stake In The BTC Oil Pipeline   [Feb-18-18 07:00PM  Rigzone.com]
▶ Big Oil Earnings: The Good, the Bad, and the Ugly   [Feb-17-18 11:00AM  Motley Fool]
▶ 10 Ways To Play The Oil Patch   [Feb-16-18 10:58AM  Forbes]
▶ 52-Week Company Lows   [10:53AM  GuruFocus.com]
▶ CNBC IQ 100: Progressive up over 4%   [01:22PM  CNBC Videos]
▶ Court declines to tear up NJ's $225M settlement with Exxon   [Feb-12-18 05:05PM  Associated Press]
▶ After Slump, Energy ETFs Could be Buys   [10:54AM  ETF Trends]
▶ Exxon Should Be Its Own Activist   [10:06AM  Bloomberg]
▶ 3 Top Oil Stocks to Buy in February   [Feb-10-18 11:32AM  Motley Fool]
▶ Trouble For Exxon Mobil   [02:23PM  TheStreet.com]
▶ Let's Just Face It, This Is a Correction   [02:13PM  TheStreet.com]
▶ Whats Behind The Energy Stock Selloff?   [Feb-08-18 07:00PM  Oilprice.com]
▶ Exxon Mobil Boosts Reserves in 2017   [10:30AM  24/7 Wall St.]
▶ Exxon To Produce All Of Its Oil Despite Peak Demand Fears   [Feb-07-18 05:00PM  Oilprice.com]
▶ [$$] Exxon Suit Poses Test of Russian Sanctions Rules   [06:46AM  The Wall Street Journal]
▶ [$$] Exxon Suit Poses Test of Russian Sanctions Rules   [06:10AM  The Wall Street Journal]
▶ ExxonMobil Hits Baytown Ethane Cracker Milestone   [Feb-06-18 07:00PM  Rigzone.com]
▶ Exxon Mobil nearly ready to bring Houston-area project online   [04:40PM  American City Business Journals]
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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