John D. Rockefeller still casts a long shadow above ExxonMobil. Rockefeller built Standard Oil through his commitment to return on equity while also preserving the majority of capital to reinvest back into the business, rather than paying out hefty dividends. At the time of this writing, ExxonMobil return on equity calculates out to a shade beneath 20 percent. Exxon return on equity has historically remained above that of competitors Chevron (NYSE:CVX), ConocoPhillips (NYSE:COP), and BP (NYSE:BP).
According to Bloomberg, Exxon averaged $19.27 in 2013 per-barrel crude oil equivalent costs. For the sake of comparison, Chevron and BP came in at respective $21.48 and $22.66 per-barrel costs through this same time frame.
The Bottom Line
Certainly, John D. Rockefeller would be proud of his creation. From the rise of Standard Oil to its subsequent breakup to the reunion of Standard Oil of New Jersey (Exxon) and Standard Oil of New York (Mobil), the company has maintained the qualities of its exceptional founder: seamless integration, conservative financials, and ruthless execution. Going forward, Exxon shares will continue to offer long-term alpha returns relative to both the S&P 500 and oil majors.
Again, Exxon shares closed out the July 3 trading session at $102.59. At these levels, Exxon stock trades for roughly 14 times earnings while also offering 2.7 percent in yield. Exxon shares are a compelling value relative to Chevron, ConocoPhillips, and BP. Going forward, Exxon will continue to outperform its competitors amid the long-term recovery of natural gas prices. In 2009, Exxon went especially heavy into natural gas after acquiring XTO Energy in a $41 billion deal. For 2014, The U.S. Energy Information Administration has forecast an average Henry Hub natural gas spot price of $4.74 per MMBtu ($3.73 per MMBtu in 2013).