Intrinsic value of Exxon Mobil - XOM

Previous Close

$83.11

  Intrinsic Value

$9.82

stock screener

  Rating & Target

str. sell

-88%

  Value-price divergence*

+11%

Previous close

$83.11

 
Intrinsic value

$9.82

 
Up/down potential

-88%

 
Rating

str. sell

 
Value-price divergence*

+11%

*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 353.9

 

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
  7.90
  7.61
  7.35
  7.11
  6.90
  6.71
  6.54
  6.39
  6.25
  6.12
  6.01
  5.91
  5.82
  5.74
  5.66
  5.60
  5.54
  5.48
  5.44
  5.39
  5.35
  5.32
  5.29
  5.26
  5.23
  5.21
  5.19
  5.17
  5.15
  5.14
Revenue, $m
  218,608
  235,878
  253,828
  272,482
  291,867
  312,014
  332,957
  354,737
  377,394
  400,975
  425,528
  451,108
  477,768
  505,570
  534,575
  564,850
  596,466
  629,494
  664,013
  700,104
  737,852
  777,346
  818,680
  861,952
  907,265
  954,727
  1,004,451
  1,056,556
  1,111,165
  1,168,410
  1,228,426
Variable operating expenses, $m
 
  167,002
  179,710
  192,917
  206,642
  220,906
  235,734
  251,153
  267,195
  283,890
  301,274
  319,384
  338,260
  357,943
  378,479
  399,914
  422,298
  445,682
  470,121
  495,674
  522,399
  550,361
  579,625
  610,262
  642,344
  675,947
  711,151
  748,041
  786,705
  827,234
  869,726
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
  233,140
  247,502
  262,403
  277,866
  293,910
  310,563
  327,853
  345,812
  364,473
  383,871
  404,046
  425,039
  446,891
  469,651
  493,365
  518,086
  543,864
  570,758
  598,827
  628,131
  658,736
  690,709
  724,124
  759,052
  795,573
  833,767
  873,723
  915,529
  959,278
  1,005,072
Operating income, $m
  936
  2,738
  6,326
  10,078
  14,002
  18,104
  22,394
  26,883
  31,582
  36,502
  41,657
  47,061
  52,729
  58,678
  64,924
  71,485
  78,380
  85,630
  93,255
  101,278
  109,721
  118,610
  127,970
  137,829
  148,213
  159,155
  170,683
  182,832
  195,636
  209,131
  223,355
EBITDA, $m
  23,244
  26,836
  32,258
  37,916
  43,819
  49,980
  56,410
  63,124
  70,137
  77,466
  85,130
  93,147
  101,539
  110,328
  119,537
  129,191
  139,316
  149,940
  161,092
  172,802
  185,102
  198,025
  211,608
  225,887
  240,902
  256,692
  273,300
  290,772
  309,155
  328,499
  348,854
Interest expense (income), $m
  818
  1,369
  1,814
  2,272
  2,749
  3,244
  3,758
  4,293
  4,849
  5,427
  6,029
  6,656
  7,309
  7,990
  8,700
  9,440
  10,213
  11,020
  11,863
  12,745
  13,666
  14,630
  15,638
  16,693
  17,798
  18,955
  20,167
  21,436
  22,767
  24,161
  25,622
Earnings before tax, $m
  7,969
  1,370
  4,512
  7,806
  11,253
  14,860
  18,636
  22,590
  26,733
  31,075
  35,628
  40,405
  45,420
  50,688
  56,224
  62,045
  68,167
  74,610
  81,391
  88,533
  96,055
  103,980
  112,332
  121,135
  130,415
  140,199
  150,516
  161,396
  172,870
  184,970
  197,733
Tax expense, $m
  -406
  370
  1,218
  2,108
  3,038
  4,012
  5,032
  6,099
  7,218
  8,390
  9,619
  10,909
  12,263
  13,686
  15,181
  16,752
  18,405
  20,145
  21,976
  23,904
  25,935
  28,075
  30,330
  32,706
  35,212
  37,854
  40,639
  43,577
  46,675
  49,942
  53,388
Net income, $m
  7,840
  1,000
  3,294
  5,698
  8,215
  10,848
  13,605
  16,491
  19,515
  22,684
  26,008
  29,496
  33,157
  37,002
  41,044
  45,293
  49,762
  54,465
  59,416
  64,629
  70,120
  75,906
  82,002
  88,429
  95,203
  102,346
  109,877
  117,819
  126,195
  135,028
  144,345

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
  352,583
  379,415
  407,298
  436,273
  466,388
  497,694
  530,249
  564,116
  599,364
  636,066
  674,301
  714,153
  755,710
  799,066
  844,320
  891,578
  940,948
  992,546
  1,046,494
  1,102,918
  1,161,952
  1,223,737
  1,288,419
  1,356,151
  1,427,096
  1,501,422
  1,579,306
  1,660,935
  1,746,502
  1,836,213
Adjusted assets (=assets-cash), $m
  326,657
  352,583
  379,415
  407,298
  436,273
  466,388
  497,694
  530,249
  564,116
  599,364
  636,066
  674,301
  714,153
  755,710
  799,066
  844,320
  891,578
  940,948
  992,546
  1,046,494
  1,102,918
  1,161,952
  1,223,737
  1,288,419
  1,356,151
  1,427,096
  1,501,422
  1,579,306
  1,660,935
  1,746,502
  1,836,213
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
  267,486
  287,841
  308,995
  330,977
  353,823
  377,573
  402,271
  427,964
  454,705
  482,549
  511,556
  541,789
  573,316
  606,208
  640,540
  676,392
  713,846
  752,991
  793,918
  836,724
  881,511
  928,383
  977,454
  1,028,839
  1,082,661
  1,139,048
  1,198,134
  1,260,061
  1,324,977
  1,393,035
Working capital, $m
  -6,222
  4,246
  4,569
  4,905
  5,254
  5,616
  5,993
  6,385
  6,793
  7,218
  7,660
  8,120
  8,600
  9,100
  9,622
  10,167
  10,736
  11,331
  11,952
  12,602
  13,281
  13,992
  14,736
  15,515
  16,331
  17,185
  18,080
  19,018
  20,001
  21,031
  22,112
Total debt, $m
  42,762
  51,834
  64,927
  78,534
  92,674
  107,370
  122,648
  138,534
  155,062
  172,263
  190,173
  208,832
  228,280
  248,559
  269,717
  291,801
  314,863
  338,956
  364,135
  390,462
  417,997
  446,806
  476,957
  508,521
  541,575
  576,196
  612,467
  650,474
  690,309
  732,066
  775,845
Total liabilities, $m
  162,989
  172,061
  185,154
  198,761
  212,901
  227,597
  242,875
  258,761
  275,289
  292,490
  310,400
  329,059
  348,507
  368,786
  389,944
  412,028
  435,090
  459,183
  484,362
  510,689
  538,224
  567,033
  597,184
  628,748
  661,802
  696,423
  732,694
  770,701
  810,536
  852,293
  896,072
Total equity, $m
  167,325
  180,522
  194,260
  208,536
  223,372
  238,791
  254,819
  271,487
  288,827
  306,874
  325,666
  345,242
  365,646
  386,923
  409,122
  432,292
  456,488
  481,765
  508,184
  535,805
  564,694
  594,920
  626,553
  659,670
  694,349
  730,673
  768,728
  808,605
  850,398
  894,209
  940,141
Total liabilities and equity, $m
  330,314
  352,583
  379,414
  407,297
  436,273
  466,388
  497,694
  530,248
  564,116
  599,364
  636,066
  674,301
  714,153
  755,709
  799,066
  844,320
  891,578
  940,948
  992,546
  1,046,494
  1,102,918
  1,161,953
  1,223,737
  1,288,418
  1,356,151
  1,427,096
  1,501,422
  1,579,306
  1,660,934
  1,746,502
  1,836,213
Debt-to-equity ratio
  0.256
  0.290
  0.330
  0.380
  0.410
  0.450
  0.480
  0.510
  0.540
  0.560
  0.580
  0.600
  0.620
  0.640
  0.660
  0.680
  0.690
  0.700
  0.720
  0.730
  0.740
  0.750
  0.760
  0.770
  0.780
  0.790
  0.800
  0.800
  0.810
  0.820
  0.830
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
  1,000
  3,294
  5,698
  8,215
  10,848
  13,605
  16,491
  19,515
  22,684
  26,008
  29,496
  33,157
  37,002
  41,044
  45,293
  49,762
  54,465
  59,416
  64,629
  70,120
  75,906
  82,002
  88,429
  95,203
  102,346
  109,877
  117,819
  126,195
  135,028
  144,345
Depreciation, amort., depletion, $m
  22,308
  24,098
  25,932
  27,837
  29,818
  31,876
  34,016
  36,241
  38,555
  40,964
  43,473
  46,086
  48,810
  51,650
  54,613
  57,706
  60,936
  64,310
  67,837
  71,524
  75,381
  79,415
  83,638
  88,059
  92,688
  97,537
  102,617
  107,940
  113,519
  119,367
  125,499
Funds from operations, $m
  20,476
  25,098
  29,226
  33,536
  38,032
  42,724
  47,620
  52,732
  58,070
  63,649
  69,481
  75,582
  81,967
  88,652
  95,657
  102,999
  110,698
  118,776
  127,253
  136,153
  145,501
  155,321
  165,640
  176,487
  187,891
  199,883
  212,494
  225,759
  239,714
  254,396
  269,844
Change in working capital, $m
  -1,606
  311
  323
  336
  349
  363
  377
  392
  408
  424
  442
  460
  480
  500
  522
  545
  569
  595
  621
  650
  679
  711
  744
  779
  816
  854
  895
  938
  983
  1,030
  1,080
Cash from operations, $m
  22,082
  24,787
  28,902
  33,200
  37,683
  42,361
  47,243
  52,340
  57,662
  63,224
  69,039
  75,121
  81,487
  88,152
  95,135
  102,454
  110,129
  118,181
  126,631
  135,503
  144,821
  154,610
  164,896
  175,709
  187,076
  199,028
  211,599
  224,821
  238,731
  253,365
  268,763
Maintenance CAPEX, $m
  0
  -22,335
  -24,098
  -25,932
  -27,837
  -29,818
  -31,876
  -34,016
  -36,241
  -38,555
  -40,964
  -43,473
  -46,086
  -48,810
  -51,650
  -54,613
  -57,706
  -60,936
  -64,310
  -67,837
  -71,524
  -75,381
  -79,415
  -83,638
  -88,059
  -92,688
  -97,537
  -102,617
  -107,940
  -113,519
  -119,367
New CAPEX, $m
  -16,163
  -19,571
  -20,356
  -21,153
  -21,982
  -22,846
  -23,750
  -24,698
  -25,693
  -26,741
  -27,844
  -29,007
  -30,233
  -31,527
  -32,892
  -34,332
  -35,852
  -37,454
  -39,145
  -40,927
  -42,806
  -44,786
  -46,873
  -49,070
  -51,385
  -53,822
  -56,387
  -59,087
  -61,927
  -64,915
  -68,059
Cash from investing activities, $m
  -12,403
  -41,906
  -44,454
  -47,085
  -49,819
  -52,664
  -55,626
  -58,714
  -61,934
  -65,296
  -68,808
  -72,480
  -76,319
  -80,337
  -84,542
  -88,945
  -93,558
  -98,390
  -103,455
  -108,764
  -114,330
  -120,167
  -126,288
  -132,708
  -139,444
  -146,510
  -153,924
  -161,704
  -169,867
  -178,434
  -187,426
Free cash flow, $m
  9,679
  -17,119
  -15,551
  -13,885
  -12,136
  -10,303
  -8,383
  -6,374
  -4,271
  -2,072
  231
  2,642
  5,167
  7,815
  10,593
  13,509
  16,571
  19,790
  23,176
  26,739
  30,491
  34,443
  38,608
  43,000
  47,632
  52,518
  57,675
  63,118
  68,864
  74,931
  81,337
Issuance/(repayment) of debt, $m
  4,293
  12,729
  13,094
  13,607
  14,140
  14,696
  15,277
  15,887
  16,527
  17,201
  17,911
  18,659
  19,448
  20,280
  21,158
  22,084
  23,062
  24,093
  25,180
  26,326
  27,535
  28,809
  30,151
  31,565
  33,053
  34,621
  36,271
  38,008
  39,835
  41,757
  43,779
Issuance/(repurchase) of shares, $m
  -971
  12,198
  10,444
  8,578
  6,621
  4,571
  2,424
  177
  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
  24,927
  23,538
  22,185
  20,761
  19,267
  17,701
  16,064
  16,527
  17,201
  17,911
  18,659
  19,448
  20,280
  21,158
  22,084
  23,062
  24,093
  25,180
  26,326
  27,535
  28,809
  30,151
  31,565
  33,053
  34,621
  36,271
  38,008
  39,835
  41,757
  43,779
Total cash flow (excl. dividends), $m
  12,405
  7,807
  7,987
  8,300
  8,625
  8,964
  9,318
  9,690
  12,256
  15,129
  18,141
  21,300
  24,615
  28,095
  31,751
  35,593
  39,633
  43,883
  48,356
  53,066
  58,026
  63,252
  68,759
  74,565
  80,685
  87,139
  93,946
  101,125
  108,699
  116,688
  125,116
Retained Cash Flow (-), $m
  3,486
  -13,197
  -13,738
  -14,276
  -14,835
  -15,419
  -16,029
  -16,668
  -17,340
  -18,047
  -18,792
  -19,576
  -20,404
  -21,277
  -22,198
  -23,170
  -24,196
  -25,277
  -26,418
  -27,621
  -28,889
  -30,226
  -31,634
  -33,117
  -34,679
  -36,324
  -38,055
  -39,877
  -41,794
  -43,811
  -45,932
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
 
  -5,390
  -5,751
  -5,977
  -6,211
  -6,455
  -6,710
  -6,978
  -5,084
  -2,918
  -650
  1,724
  4,211
  6,818
  9,552
  12,422
  15,437
  18,606
  21,938
  25,445
  29,137
  33,026
  37,126
  41,448
  46,006
  50,816
  55,891
  61,249
  66,905
  72,877
  79,184
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
 
  -5,168
  -5,265
  -5,201
  -5,114
  -5,003
  -4,870
  -4,714
  -3,178
  -1,676
  -341
  819
  1,797
  2,592
  3,207
  3,647
  3,923
  4,048
  4,040
  3,918
  3,702
  3,416
  3,080
  2,717
  2,343
  1,977
  1,631
  1,315
  1,035
  796
  596
Current shareholders' claim on cash, %
  100
  96.7
  94.1
  92.2
  90.8
  89.9
  89.5
  89.5
  89.5
  89.5
  89.5
  89.5
  89.5
  89.5
  89.5
  89.5
  89.5
  89.5
  89.5
  89.5
  89.5
  89.5
  89.5
  89.5
  89.5
  89.5
  89.5
  89.5
  89.5
  89.5
  89.5

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 44
Price to Sales 1.6
Price to Book 2.1
Price to Tangible Book
Price to Cash Flow 15.6
Price to Free Cash Flow 58.2
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 7.9% 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 4258.73 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 $353.9 billion.

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COMPANY NEWS

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▶ [$$] Exxon Mobil Buys Crude-Oil Terminal From Genesis Energy   [Oct-18-17 04:33PM  The Wall Street Journal]
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▶ The Natural Gas Market Is Set To Boom   [Oct-17-17 07:00PM  Oilprice.com]
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▶ Hurricane impact on the energy sector   [03:41PM  CNBC Videos]
▶ Trump to nominate climate doubter as environmental adviser   [Oct-13-17 06:31PM  Associated Press]
▶ Oil Prices Spike On Middle East Tensions   [03:30PM  Oilprice.com]
▶ ConocoPhillips (COP) Stock Is Running on Empty Short It   [Oct-12-17 10:46AM  InvestorPlace]
▶ IEA Sees OPEC Extending Deal; Oil Falls On U.S. Stockpile Gain   [08:42AM  Investor's Business Daily]
▶ Get Spiffy's newest partner? Exxon   [02:50PM  American City Business Journals]
▶ Trump's jibe deepens feud with Tillerson; he was joking?   [Oct-10-17 10:41PM  Associated Press]
▶ Assessing the Beta Levels of Integrated Energy Stocks   [Oct-09-17 10:36AM  Market Realist]
▶ 3 Stocks that Pay You to Own Them   [08:12AM  Motley Fool]
▶ Why ExxonMobil Rose More Than 7% in September   [Oct-06-17 05:17PM  Motley Fool]
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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