Thursday is proving challenging for oil stocks due to falling oil prices. Brent crude oil prices dropped 2.8%, reaching about $71 per barrel, while West Texas Intermediate (WTI) crude prices fell more than 3% to approximately $67.50. Concurrently, shares of major oil companies like ExxonMobil (XOM, Financial) decreased by 1.48%, ConocoPhillips (COP) by 2.2%, and Shell (SHEL) by 3.7%.
The decline in oil prices is attributed to the OPEC+ group's continued plan to increase oil production starting in October and reports indicating China's economy is still contracting, signifying lower demand. China's Purchasing Managers' Index, showing its worst numbers in six months, significantly impacts crude oil prices as China is the world's largest crude importer.
Despite these factors, Libya's current non-production status is helping to maintain a "floor" under oil prices. However, once Libya resumes its production and exports, which can reach up to 700,000 barrels a day, oil prices could face further downward pressure. This potential additional supply surpasses the OPEC output hike of 180,000 barrels per day.
ExxonMobil (XOM, Financial) stock has seen some movement, reflecting the broader trends in the oil market. Currently priced at $113.07, the stock is down by 1.48%. Over the past 52 weeks, ExxonMobil has traded between $95.77 and $123.75, showing a marginal increase of 0.57% while showcasing a year-to-date growth of 16.04%.
Valuation metrics suggest that ExxonMobil (XOM, Financial) might be an attractive investment at its current price point. The stock's price-to-earnings (P/E) ratio stands at 13.53, which is relatively modest in the oil and gas sector. The price-to-book (P/B) ratio is 1.87, close to its 2-year low. The company's GF Value, assessed at $100.52, indicates that the stock might be "Modestly Overvalued" as per GuruFocus's valuation standards. For more detailed valuation insights, you can visit GF Value.
From a financial standpoint, ExxonMobil exhibits strong financial health with a robust Altman Z-score of 4.24, indicating stability. Additionally, an Altman Z-score above 3 generally signifies that a company is in a healthy financial state. The company also has a favorable Beneish M-Score of -2.52, suggesting it is unlikely to be a manipulator of financial statements.
The dividends offered by ExxonMobil are another key consideration. With a dividend yield of 3.35%, albeit close to its 5-year low, the company maintains a steady track of dividend payments, showing commitment to returning value to shareholders.
Despite the current volatility in the oil market, ExxonMobil's strong financial foundation, robust cash flows, and disciplined capital allocation practices may provide a compelling investment case for long-term investors.
