Does Exxon Mobil Stock Still Have Room to Run?
Exxon Mobil (XOM) stock is at an interesting point right now. It has strong momentum, and if you bet on it, you are betting on a company with strong margin, good cash flow, low-debt capital structure, and good tailwinds. But is that enough?
Why Bet On XOM Now?
The core long thesis rests on XOM’s superior, low-cost asset base, particularly in Guyana and the Permian basin. These assets allow the company to profitably grow production volumes even in a stable or moderately weak commodity price environment, generating significant free cash flow through the cycle.
- Production from advantaged assets in Guyana and the Permian is growing, with Q4 2025 production hitting a 40-year high at 5.0 million oil-equivalent barrels per day.
- The Stabroek block in Guyana is one of the lowest-cost new oil developments globally, providing a structural margin advantage.
- The company’s breakeven portfolio price is below $40/bbl, ensuring cash flow generation in most macroeconomic scenarios.
How Do The Fundamentals Look?
- Long-Term Profitability: About 16.3% operating cash flow margin and 11.8% operating margin last 3-year average.
- Strong Momentum: Currently in the top 10th percentile of stocks in terms of “trend strength” – our proprietary momentum metric.
- Revenue Growth: Exxon Mobil saw revenue growth of -4.5% LTM and -6.4% last 3-year average, but this is not a growth story
- Room To Run: Despite its momentum, XOM stock is trading 4.0% below its 52-week high.
Below is a quick comparison of XOM fundamentals with S&P medians.
| XOM | S&P Median | |
|---|---|---|
| Sector | Energy | – |
| Industry | Integrated Oil & Gas | – |
| PS Ratio | 2.0 | 3.3 |
| PE Ratio | 21.9 | 25.2 |
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| LTM* Revenue Growth | -4.5% | 6.5% |
| 3Y Average Annual Revenue Growth | -6.4% | 5.4% |
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| LTM* Operating Margin | 10.5% | 18.8% |
| 3Y Average Operating Margin | 11.8% | 18.2% |
| LTM* Op Cash Flow Margin | 16.0% | 20.7% |
| 3Y Average Op Cash Flow Margin | 16.3% | 20.2% |
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| DE Ratio | 6.9% | 20.3% |
*LTM: Last Twelve Months
The Bear View & The Current Investment Debate
The current investment debate on XOMis centered around: Can record-breaking production volumes from advantaged assets (Guyana, Permian) offset the negative impact of softening global commodity prices and weakening downstream margins?
The prevailing sentiment is neutral. Record production volumes are being negated by the market’s focus on macro risks. Consensus EPS estimates are falling, and clear cyclical weakness is emerging in the downstream chemicals business, keeping sentiment capped.
| Bull View | Bear View |
|---|---|
| XOM’s superior, low-cost assets are driving historic production growth, generating significant free cash flow that can sustain shareholder returns regardless of price volatility. | As a price-taker, XOM’s strong operational performance is irrelevant if a global slowdown or OPEC+ breakdown causes a commodity price crash, crushing revenue and earnings. |
You can evaluate more on which view to bet on by visiting XOM Investment Highlights & Full Analysis
XOM Is Just One of Several Such Stocks
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We chose these stocks using the following criteria:
- Greater than $2 Bil in market cap
- High operating or (cash flow from operations) margins
- Low-debt capital structure
- Strong momentum
A portfolio that was built starting 12/31/2016 with stocks that fulfill the criteria above would have performed as follows:
- Average 12-month forward returns of nearly 15%
- 12-month win rate (percentage of picks returning positive) of about 60%
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