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XOM, huge Cashflow on investment slowdown
Current, target price USD61, 113 (+86%)
May 19th, 2021
1 minute read
Sales, jump with oil
Cashflow, much higher
1 minute read
Sales, jump with oil
- With higher oil prices, sales jumped by 29% in the first quarter to 57,552 million dollars, which is +17% compared to our forecast.
- This is after a -3% decline in the fourth quarter & brings the quarterly average growth to 7%.
- We predict average growth of 5% a quarter in this next 12 months which will bring sales to 68,929 million dollars by the first quarter of 2022.
Cashflow, much higher
- Cashflow was higher 6,909 million dollars in the first quarter after 703 million dollars in the fourth quarter, on lower investment.
- Average quarterly cashflow is now positive 803 million dollars.
- We use flat investment spending of -2,355 million dollars, which with higher sales, gives a similar average quarterly cashflow of 6,397 million dollars in this next 12 months.
Balance sheet, stable leverage
Profit, positive again
Value, very cheap
- The net leverage of cash minus total liabilities was -166,154 million dollars in the first quarter from -164,256 million dollars in the fourth quarter & -155,649 million dollars a year ago.
- With our forecast higher cashflow & assuming an equity payout of -1,499 million dollars...
- ...net leverage will be -142,066 million dollars in 12 months time.
Profit, positive again
- Net profit was positive again at 2,796 million dollars in the first quarter from a -20,603 million dollars loss in the fourth quarter.
- The cash cost ratio of net profit add back non cash costs minus sales as a percent of sales was down to -86%.
- We use the same -86% costs, to predict a return to positive next 12 months profit of 14,991 million dollars.
Value, very cheap
- XOM cumulative net capital is at 60,024 million dollars from the last six years.
- At the current market value of 257,300 million dollars, based on forecasts it’s 3.01X capital paid, 1.00X sales, 0.80X assets, 1.45X equity, with a 8.4% profitability & a 0.6% yield.
- Our free cashflow forecast is 25,587 million dollars. At 1.6% with a large 0.3X adjustment, gives an 86% higher target price of 113 dollars.
