Other stocks here
XOM, sales recovering fast
🎯 ⛽️ 📈 USD72
Last 12-month cashflow +USD 1.548 billion ⬇️
November 12th, 2020
⏰ 1 minute read
⏰ 1 minute read
Watch the 1 minute explainer ⬇️
Sales
Sales jumped back by +46% in the third quarter from second after a -41% drop in the second quarter. At USD 46.2 billion, sales were just 3% below our optimistic forecast. Downstream was the leader with a +47% jump. We are expecting a continuing recovery with sales predicted to return to USD 66.3 billion in the third quarter next year.
Cashflow
Cashflow was still negative in the third quarter -USD 183 million, but much smaller than the second quarter -USD 1.36 billion. Investment spending USD 3.7 billion was a bit higher than expected but much less than second quarter. We adjust our investment higher & with the sales recovery this gives average quarterly cashflow +USD 2.7 billion this next 12 months.
Sales jumped back by +46% in the third quarter from second after a -41% drop in the second quarter. At USD 46.2 billion, sales were just 3% below our optimistic forecast. Downstream was the leader with a +47% jump. We are expecting a continuing recovery with sales predicted to return to USD 66.3 billion in the third quarter next year.
Cashflow
Cashflow was still negative in the third quarter -USD 183 million, but much smaller than the second quarter -USD 1.36 billion. Investment spending USD 3.7 billion was a bit higher than expected but much less than second quarter. We adjust our investment higher & with the sales recovery this gives average quarterly cashflow +USD 2.7 billion this next 12 months.
Sales to recover, investment spending cut, debt decline, shares back to $72...
Balance sheet
Despite the improving sales & the less negative cashflow, the balance sheet net debt was still higher again. Net debt is now USD 60 billion up from USD 41.8 billion just a year ago! With our forecast cashflow & assuming a dividend of only USD 700 million, net debt would return back to USD 50 billion in 12 months time.
Profit
Net profit was negative but less so -USD 709 million in the third quarter from -USD 1.17 billion in the second. The cash cost ratio, net profit add non cash costs minus sales as a % of sales was still high at 91%. With rising sales we use 89% to predict profit doubles to USD 7 billion this 12 months.
Value
XOM has paid out capital of USD 47 billion in the last five years. At USD 152.5 billion, it’s 3.25X the capital paid, 0.65X sales, 0.44X assets, 0.8X equity with a forecast 24.9% profitability & a 0.5% yield. Our cashflow forecast is now USD 10.8 billion. At 2.6% with a 0.45X adjustment this gives a higher target price of USD72.
Despite the improving sales & the less negative cashflow, the balance sheet net debt was still higher again. Net debt is now USD 60 billion up from USD 41.8 billion just a year ago! With our forecast cashflow & assuming a dividend of only USD 700 million, net debt would return back to USD 50 billion in 12 months time.
Profit
Net profit was negative but less so -USD 709 million in the third quarter from -USD 1.17 billion in the second. The cash cost ratio, net profit add non cash costs minus sales as a % of sales was still high at 91%. With rising sales we use 89% to predict profit doubles to USD 7 billion this 12 months.
Value
XOM has paid out capital of USD 47 billion in the last five years. At USD 152.5 billion, it’s 3.25X the capital paid, 0.65X sales, 0.44X assets, 0.8X equity with a forecast 24.9% profitability & a 0.5% yield. Our cashflow forecast is now USD 10.8 billion. At 2.6% with a 0.45X adjustment this gives a higher target price of USD72.
