Exxon Mobil: Are All-Time Highs Imminent?

With shares of Exxon Mobil (NYSE:XOM) trading around $89, 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, including olefins, aromatics, polyethylene and polypropylene plastics, and a range of specialty products. The company has a number of divisions and affiliates with names that include ExxonMobil, Exxon, Esso or Mobil that operate or market products in the United States and other countries of the world. Exxon Mobil’s principal business is energy, involving 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. Energy is essential to global growth and day-to-day operations of companies and consumers worldwide. So long as crude oil is a main source of energy, a bellwether like Exxon Mobil will continue to see rising profits well into the future.

T = Technicals on the Stock Chart are Strong

Exxon Mobil stock has seen a consistent uptrend extending back several years. The stock is now consolidating slightly below all-time high prices. 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 rising key averages which signal neutral to bullish price action in the near-term.

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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

21.16%

96%

92%

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

July Options

Steep

Average

August 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 Increasing 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 Q1

2012 Q4

2012 Q3

2012 Q2

Earnings Growth (Y-O-Y)

6.00%

11.33%

-1.88%

56.42%

Revenue Growth (Y-O-Y)

-12.29%

-5.29%

-7.68%

1.5%

Earnings Reaction

-1.52%

0.07%

0.47%

1.5%

Exxon Mobil has seen increasing earnings and decreasing revenue figures over most of the last four quarters. From these numbers, the markets have generally been pleased with Exxon Mobil’s recent earnings announcements.

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P = Excellent 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:RDSA), and sector?

Exxon Mobil

Chevron

BP

Royal Dutch Shell

Sector

Year-to-Date Return

3.72%

10.89%

2.67%

-4.47%

2.79%

Exxon Mobil has been a relative performance leader, year-to-date.

Conclusion

Exxon Mobil is a global provider of essential energy products and services to companies and consumers operating in a multitude of industries. The stock has been steadily chugging higher and is now consolidating slightly below all-time high prices. Over the last four quarters, Exxon Mobil has seen increasing earnings and decreasing revenue figures what have maintained investors generally happy. Relative to its peers and sector, Exxon Mobil has been a year-to-date performance leader. WAIT AND SEE what Exxon Mobil does this coming quarter.

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