Exxon Mobil Corporation XOM generates the majority of its earnings from upstream operations, and, therefore, is highly vulnerable to volatility in oil and natural gas prices. However, unlike many energy companies, XOM can rely on its strong balance sheet to sail through the period of business uncertainty.
XOM has a debt-to-capitalization of 15.44%, significantly lower than 29.62% for the composite stocks belonging to the industry. Thus, the integrated energy giant has significantly lower exposure to debt capital than many of its peers. The strong balance sheet helps ExxonMobil $XOM to maintain operations, fund capital projects and pay out dividends even when the pricing environment of commodities turns unfavorable.
XOM’s borrowing costs will likely be low, owing to its strong creditworthiness. During business uncertainty, when many firms will be forced to divest their operations, XOM will be able to pursue acquisitions on favorable terms, owing to its financial strength.
CVX & COP Also Have Strong Balance Sheets
Like XOM, Chevron $CVX Corporation CVX and ConocoPhillips $COP COP have considerably lower debt exposure. Thus, both CVX and COP, despite having huge vulnerability to oil and gas price volatility, can support their operations during uncertain times.
While CVX has a debt-to-capitalization of 19.35%, COP has 26.55% of debt to capitalization.
XOM’s Price Performance, Valuation & Estimates
ExxonMobil’s shares have gained 50.7% over the past year compared with the 49.3% improvement of the composite stocks belonging to the industry.
Image Source: Zacks Investment Research
From a valuation standpoint, XOM trades at a trailing 12-month enterprise value to EBITDA (EV/EBITDA) of 10.33X. This is above the broader industry average of 6.61X.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for XOM’s 2026 earnings has seen downward revisions over the past seven days.
Image Source: Zacks Investment Research
ExxonMobil currently carries a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Zacks' Research Chief Names "Stock Most Likely to Double"
Our team of experts has just released the 5 stocks with the greatest probability of gaining +100% or more in the coming months. Of those 5, Director of Research Sheraz Mian highlights the one stock set to climb highest.
This top pick is a little-known satellite-based communications firm. Space is projected to become a trillion dollar industry, and this company's customer base is growing fast. Analysts have forecasted a major revenue breakout in 2025. Of course, all our elite picks aren't winners but this one could far surpass earlier Zacks' Stocks Set to Double like Hims & Hers Health, which shot up +209%.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Chevron Corporation (CVX): Free Stock Analysis Report
Exxon Mobil Corporation (XOM): Free Stock Analysis Report
ConocoPhillips (COP): Free Stock Analysis Report