How ExxonMobil Survives Oil Price Cycles and Rewards Shareholders

Exxon Mobil Corporation XOM, an integrated energy giant, generates the majority of its earnings from upstream business, which makes its business model extremely vulnerable to the volatility in commodity prices. Despite the vulnerability, XOM has been able to return capital to its shareholders consistently.

For 43 consecutive years, ExxonMobil has been increasing dividend payments. In fact, among the S&P 500 companies, XOM is the second-largest payer of dividends. The integrated major also repurchases shares aggressively.  It intended to buy back $20 billion of its shares this year and expects to maintain the pace next year as well.  

Thus, it seems that despite the vulnerability, the company has survived all business cycles. This resilience largely stems from ExxonMobil’s access to low-cost, prolific oil and natural gas resources, along with its strong balance sheet. Notably, XOM has a debt-to-capitalization of 13.6%, considerably lower than 28.7% of the composite stocks belonging to the industry.

FANG & COP are Also Resilient Like XOM

Diamondback Energy Inc. FANG and ConocoPhillips COP are also likely to survive business uncertainty, despite their strong upstream presence. This is primarily due to their lower exposure to debt capital. While FANG’s debt to capitalization stands at 26.3%, COP’s debt to capitalization is 26.6%. Both FANG and COP have a presence in Permian, the most prolific basin in the United States, and are thus able to sail through low oil prices.

XOM’s Price Performance, Valuation & Estimates

Shares of XOM have gained 14.5% over the past year compared with the 15.7% improvement of the composite stocks belonging to the industry.

From a valuation standpoint, XOM trades at a trailing 12-month enterprise value to EBITDA (EV/EBITDA) of 7.57X. This is above the broader industry average of 4.77X.

The Zacks Consensus Estimate for XOM’s 2025 earnings has seen downward revisions over the past seven days.

ExxonMobil currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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

This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research