Can Exxon Mobil Move Higher?

With shares of Exxon Mobil (NYSE:XOM) trading around $90, 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 engages in the exploration and production of crude oil and natural gas, and manufacture of petroleum products. The company also transports and sells crude oil, natural gas, and petroleum products. Global growth, consumers, and businesses alike require energy for many daily processes. Exxon Mobil is a well-established company in the energy space that stands ready to provide goods and services across the globe for years to come.

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T = Technicals on the Stock Chart are Strong

Exxon Mobil has seen a consistent long-term uptrend for a few decades now. Currently, the stock is getting ready to head towards all-time highs. 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 slightly above its key averages which signal neutral to bullish price action in the near-term.

XOM

(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

18.42%

90%

84%

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

Put IV Skew

Call IV Skew

April Options

Steep

Average

May Options

Steep

Average

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

2012 Q4

2012 Q3

2012 Q2

2012 Q1

Earnings Growth (Y-O-Y)

11.68%

-1.88%

56.42%

-6.54%

Revenue Growth (Y-O-Y)

-5.3%

-7.68%

1.49%

8.82%

Earnings Reaction

0.07%

0.47%

1.49%

-0.89%

Exxon Mobil has seen increasing earnings growth and mixed revenue growth over the last four quarters. From these figures, the markets have been pleased about Exxon Mobil’s last four earnings announcements.

P = Average Relative Performance Versus Peers and Sector

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

Exxon Mobil

Chevron

BP

Royal Dutch Shell

Sector

Year-to-Date Return

1.03%

6.88%

-2.52%

-7.34%

5.39%

Exxon Mobil has been an average performer relative to its peers and sector year-to-date.

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Conclusion

Exxon Mobil is a well-established company that provides essential products and services to consumers and businesses across the globe. The stock has been in a consistent long-term uptrend and is currently consolidating near all-time high prices. Earnings and revenue rates have been decent for the company so investors have been satisfied. Relative to its peers and sector, Exxon Mobil has been an average performer year-to-date. Look for Exxon Mobil to continue to OUTPERFORM.

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