Is Exxon Mobil Stock Enticing After Recent News?

With shares of Exxon Mobil (NYSE:XOM) trading around $93, is XOM an OUTPERFORM, WAIT AND SEE, or STAY AWAY? Let's analyze the stock with the relevant sections of our CHEAT SHEET investing framework.

T = Trends for a Stock’s Movement

Exxon Mobil is a manufacturer and marketer of commodity petrochemicals like olefins, aromatics, polyethylene, and polypropylene plastics, as well as a range of specialty products. The company has a number of divisions and affiliates with names that include ExxonMobil, Exxon, Esso, and Mobil, which operate or market products in the United States and other countries. Exxon Mobil's principal business is energy, involving the exploration for and production of crude oil and natural gas; manufacture of petroleum products; and transportation and sale of crude oil, natural gas, and petroleum products.

Exxon Mobil sold part of its controversial stake in a massive Iraqi oilfield to PetroChina and Indonesia’s Pertamina amid a long-running row with Baghdad. The sale of the stake in the West Qurna-1 field in south Iraq, one of the country’s largest, marks a key step toward resolving the dispute with the central government over Exxon’s contracts with the autonomous Kurdish region.”The agreement was signed for Exxon Mobil to sell part of its 60 percent stake,” Iraq oil ministry spokesman Assem Jihad said.

T = Technicals on the Stock Chart Are Mixed

Exxon Mobil stock has remained in a range in the last several years. The stock is currently pulling back and may need time to consolidate before heading higher. Analyzing the price trend and its strength can be done using key simple moving averages. What are the key moving averages? The 50-day (pink), 100-day (blue), and 200-day (yellow) simple moving averages. As seen in the daily price chart below, Exxon Mobil is trading above its rising key averages, which signals neutral to bullish price action in the near-term.

Source: Thinkorswim

Taking a look at the implied volatility (red) and implied volatility skew levels of Exxon Mobil options may help determine if investors are bullish, neutral, or bearish.

	Implied Volatility (IV)	30-Day IV Percentile	90-Day IV Percentile
Exxon Mobil options	15.22%	6%	4%

What does this mean? This means that investors or traders are buying a small amount of call and put options contracts as compared to the last 30 and 90 trading days.

	Put IV Skew	Call IV Skew
December Options	Flat	Average
January Options	Flat	Average

As of Thursday, there is average demand from call buyers or sellers and low demand by put buyers or high demand by put sellers, all neutral to bullish over the next two months. To summarize, investors are buying a small amount of call and put option contracts and are leaning neutral to bullish over the next two months.

On the next page, let’s take a look at the earnings and revenue growth rates and the conclusion.

E = Earnings Are Mixed Quarter-Over-Quarter

Rising stock prices are often strongly correlated with rising earnings and revenue growth rates. Also, the last four quarterly earnings announcement reactions help gauge investor sentiment on Exxon Mobil’s stock. What do the last four quarterly earnings and revenue growth (Y-O-Y) figures for Exxon Mobil look like and more importantly, how did the markets like these numbers?

	2013 Q3	2013 Q2	2013 Q1	2012 Q4
Earnings Growth (Y-O-Y)	-14.35%	-54.55%	6%	11.33%
Revenue Growth (Y-O-Y)	-2.41%	-16.41%	-12.29%	-5.29%
Earnings Reaction	0.91%	-1.08%	-1.52%	0.07%

Exxon Mobil has seen mixed earnings and decreasing revenue figures over the last four quarters. From these numbers, the markets have had conflicting feelings about Exxon Mobil’s recent earnings announcements.

P = Average Relative Performance Versus Peers and Sector

How has Exxon Mobil stock done relative to its peers – BP (NYSE:BP), Chevron (NYSE:CVX), and Royal Dutch Shell (NYSE:RDSA) — and sector?

	Exxon Mobil	BP	Chevron	Royal Dutch Shell	Sector
Year-to-Date Return	8.38%	12.63%	13.21%	-3.32%	8.72%

Exxon Mobil has been an average relative performer, year-to-date.

Conclusion

Exxon Mobil is a provider of essential commodity products and services that people and companies use around the world. The company sold part of its controversial stake in a massive Iraqi oilfield to PetroChina and Indonesia’s Pertamina. The stock has been trading sideways for a couple of years and is currently pulling back from 2013 highs. Over the last four quarters, earnings have been mixed while revenues have been decreasing, which has produced conflicting feelings among investors. Relative to its peers and sector, Exxon Mobil has been an average year-to-date performer. WAIT AND SEE what Exxon Mobil does this quarter.