Exxon Mobil Corp.

Company Profile

Exxon Mobil Corporation engages in the exploration, production, transportation, and sale of crude oil and natural gas. It also engages in the manufacture, transportation, and sale of petroleum products and petrochemicals, as well as participates in electric power generation. The company manufactures and markets commodity petrochemicals, including olefins, aromatics, polyethylene and polypropylene plastics, and other specialty products.

Exxon Mobil also has interests in electric power generation facilities. In addition, it holds license to explore gas in the Gorgon liquefied natural gas project for domestic supply. The company operates in the United States, Canada, Europe, Africa, Asia-Pacific, the Middle East, Russia/Caspian region, and South America. Exxon Mobil was founded in 1870. The company was formerly known as Exxon Corporation and changed its name to Exxon Mobil Corporation in 1999. Exxon Mobil is based in Irving, Texas.

2006 Highlights Industry-leading safety record

Record Earnings of $39.5 billion

Dividends increased for 24th consecutive year and grew by 12.3%

Distributed $32.6 billion to shareholders, an increase of 9% over 2005

Industry-leading return on average capital employed (ROCE) of 32.3%

Production increased by 4%

Began work on seven major upstream projects

Downstream and chemical operating cost efficiencies and revenue enhancements exceeded $1.5 billion after-tax

Ticker: XOM

Sector: Basic Materials

Industry: Major Integrated Oil & Gas

Recommendation: BUY

Pricing: (as of 7/12/07)

Closing Price: $90.33

52-wk high $90.80

52 –wk low $63.87

Market Data:

Market Cap: $508.85B

Total Assets: $75.77B

Trading vol: 22,922,811

Valuation:

EPS (ttm): 6.88

P/E (ttm): 13.02

Profitability & Effectiveness (ttm):

ROA(yr): 19.40%

ROE(yr): 35.64%

Profit Margin(ttm): 11.00%

Oper Margin(ttm): 16.63%

Dane Barker 901313

2. The Competitive Environment

a. Two main direct competitors1. British Petroleum: BP p.l.c. provides fuel for transportation,

energy for heat and light, retail services, and petrochemicals products.

2. Chevron: Chevron Corporation operates as an integrated energy company worldwide. The company has petroleum and chemical operations and also engages in coal mining, power generation, insurance and real estate activities. The company was founded in 1879. It was formerly known as Standard Oil Company of California and changed its name to Chevron Corporation in 1984. Further, it changed its name to ChevronTexaco Corporation in 2001 and to Chevron Corporation in 2005. Chevron Corporation is based in San Ramon, California.

DIRECT COMPETITOR COMPARISON  

XOM BP CVX Industry

Market Cap: 504.85B 240.42B 200.52B 139.89B

Employees: 106,400 97,000 62,500 73.57K

Qtrly Rev Growth (yoy): -2.10% -3.10% -14.80% 11.70%

Revenue (ttm): 367.25B 264.15B 187.70B 115.92B

Gross Margin (ttm): 34.88% 19.26% 32.90% 34.88%

EBITDA (ttm): 79.90B 38.85B 38.08B 36.04B

Oper Margins (ttm): 16.63% 9.69% 13.95% 15.34%

Net Income (ttm): 40.38B 21.28B 17.86B 15.29B

EPS (ttm): 6.883 6.45 8.190 6.45

P/E (ttm): 13.02 11.59 11.39 11.55

PEG (5 yr expected): 2.47 1.69 2.34 1.69

P/S (ttm): 1.34 0.90 1.04 1.34

Looking at the chart above, one will notice that Wells Fargo is the largest company among these competitors based on market capitalization. Exxon is the largest employer among the competitors listed above with over 100,000 employees. They are right on target with the industry in gross margin with a very healthy 34.88% mark. Their net income for the trailing twelve months is over $40 billion, which is more than BP and CVX combined. However, the

most important statistics to look at are the EPS and P/E. While their EPS lags a little behind Chevron, it is still higher then British Petroleum and ahead of the industry mark. Exxon also has the highest P/E ratio among their competitors with a P/E of 13.02. The P/E ratio shows how much it costs to make $1 off that stock. Another positive sign for investors is Exxon’s leading PEG ratio, meaning that they are in a position where they should continue to see sustained growth over the next five year.

The chart above compares the returns of Exxon, BP and Chevron to the S&P 500 over the trailing twelve months. The first thing that stands out about the chart is that Exxon has outperformed the S&P for most of the year and is currently outperforming it by nearly 20%. British Petroleum has been greatly underperforming the S&P and their competitors for the past year. Their stock just recovered to the point where it was at last July. Conversely, investors in Exxon Mobil have seen their stock grow by nearly 40% over the past year. It must be noted that the stock has seen the greatest increase over the past three months as gas prices have continually been on the rise. There is no reason to expect these returns to curtail in the near future as gas prices are expected to continue climbing through the summer months and then stabilize through the end of the year.

XOM VS. INDUSTRY LEADERS

Statistic Industry Leader XOMXOM Rank

Market Capitalization XOM 504.85B - 1 / 12

P/E Ratio (ttm) TOT 25.95 13.02 4 / 12

PEG Ratio (ttm, 5 yr expected) E 3.50 2.47 2 / 12

Revenue Growth (Qtrly YoY) PTR 24.30% -2.10% 4 / 12

EPS Growth (Qtrly YoY) CVX 21.60% 18.40% 2 / 12

Long-Term Growth Rate (5 yr) PZE 18.5% 5.07% 7 / 12

Return on Equity (ttm) XOM 35.64% - 1 / 12

Long-Term Debt/Equity (mrq) PZE 1.122 0.077 10 / 12

Dividend Yield (annual) BP 3.40% 1.60% 8 / 12

Looking at the chart above, one will notice that Exxon Mobil is one of the healthiest companies in their industry. They rank at or near the top in every category listed above, with the exception of Long-Term Debt/Equity. Exxon has the largest market capitalization in the industry in addition to the highest return on equity. This is a positive sign for their investors as the company is making a better return for their stockholders than their competitors. Exxon’s EPS Growth is very good, meaning that their investors have been earning more per share than most of their competitors. Their long-term growth rate of 5.07% is relatively average for the industry. The reason for their Long-Term Debt/Equity being so high is because they are a highly leveraged company due to the mass amounts of expansion and acquisitions the company has undertaken over the past few years.

Leaders in Market Capitalization

EXXON MOBIL CP [XOM] $491.7 B

TOTAL S.A. [TOT] $377.4 B

PETROCHINA CO ADS [PTR] $281.7 B

BP PLC [BP] $237.9 B

CHEVRON CORP [CVX] $195.0 B

CONOCOPHILLIPS [COP] $139.9 B

BG GROUP PLC ADS [BRG] $58.4 B

E N I SPA ADR [E] $56.9 B

REPSOL YPF S.A. [REP] $49.9 B

PETROBRAS ENERGIA [PZE] $2.5 B

Laggards in Market Capitalization

LEXINGTON RESOURCES [LXRS.OB] $3.1 M

INTL FUEL TECH INC [IFUE.OB] $39.9 M

PETROBRAS ENERGIA [PZE] $2.5 B

REPSOL YPF S.A. [REP] $49.9 B

E N I SPA ADR [E] $56.9 B

BG GROUP PLC ADS [BRG] $58.4 B

CONOCOPHILLIPS [COP] $139.9 B

CHEVRON CORP [CVX] $195.0 B

BP PLC [BP] $237.9 B

PETROCHINA CO ADS [PTR] $281.7 B

The chart above just reiterates the fact that Exxon Mobil has the highest market capitalization in the industry. They have a much higher cap than anyone else in the industry and actually have a higher market capitalization than their two biggest competitors (BP and Chevron) combined.

Leaders in P/E Ratio (ttm)

TOTAL S.A. [TOT] 25.07

BG GROUP PLC ADS [BRG] 17.93

PETROCHINA CO ADS [PTR] 14.98

EXXON MOBIL CP [XOM] 12.68

REPSOL YPF S.A. [REP] 11.54

BP PLC [BP] 11.47

CHEVRON CORP [CVX] 11.08

CONOCOPHILLIPS [COP] 9.07

PETROBRAS ENERGIA [PZE] 8.79

E N I SPA ADR [E] 4.69

Laggards in P/E Ratio (ttm)

E N I SPA ADR [E] 4.69

PETROBRAS ENERGIA [PZE] 8.79

CONOCOPHILLIPS [COP] 9.07

CHEVRON CORP [CVX] 11.08

BP PLC [BP] 11.47

REPSOL YPF S.A. [REP] 11.54

EXXON MOBIL CP [XOM] 12.68

PETROCHINA CO ADS [PTR] 14.98

BG GROUP PLC ADS [BRG] 17.93

TOTAL S.A. [TOT] 25.07

Leaders in PEG Ratio (ttm, 5yr expected)

E N I SPA ADR [E] 3.50

EXXON MOBIL CP [XOM] 2.47

CHEVRON CORP [CVX] 2.34

BP PLC [BP] 1.69

TOTAL S.A. [TOT] 1.62

BG GROUP PLC ADS [BRG] 1.41

CONOCOPHILLIPS [COP] 1.29

PETROBRAS ENERGIA [PZE] 0.45

Laggards in PEG Ratio (ttm, 5yr expected)

PETROBRAS ENERGIA [PZE] 0.45

CONOCOPHILLIPS [COP] 1.29

BG GROUP PLC ADS [BRG] 1.41

TOTAL S.A. [TOT] 1.62

BP PLC [BP] 1.69

CHEVRON CORP [CVX] 2.34

EXXON MOBIL CP [XOM] 2.47

E N I SPA ADR [E] 3.50

The two charts above show the Leaders and Laggards for the P/E and PEG ratios. It should be noted that Exxon has one of the highest P/E ratios, which is a little alarming and has one of the highest PEG ratios as well. This is due to the high price of Exxon’s stock as well as their industry-leading market capitalization rate. 3. Valuation

Warren Buffett Way Owners' Earnings Discount Modelassuming discount rate (k) of 8.59%

Owner Earnings in 2006:Net Income $ 39,500,000,000.00 Depreciation $ 11,416,000,000.00 Amortization $ - Capital Expenditures ($18,990,000,000.00)Owner Earnings $ 31,926,000,000.00

Residual Value

Owner Earnings in year 10 $ 47,438,347,449.7

Second Stage Growth Rate (g) (add) 2.00%

Owner Earnings in year 11 $ 48,387,114,398.7

Capitalization rate (k-g) 6.59%

Value at end of year 10 $ 734,250,597,855.15

Present Value of Residual $322,066,814,320.82 Intrinsic Value of Company $585,080,696,211.63

Shares outstanding assuming dilution 5,600,000,000Intrinsic Value per share $104.48

Using the Buffet model for valuating stocks, it was found that the intrinsic value of a share of Exxon Mobil stock is $104.48. I used a discount rate of 8.59%, which I calculated using the Capital Asset Pricing Model. Exxon Mobil has a beta of 1.13, which means that their stock corresponds pretty closely with the market. With Exxon Mobil currently trading at $89.62 per share, it would appear that it has some room to grow. I believe that my valuation is a little aggressive since most analysts agree that a High Target for the stock is $97 per share. The mean target is $89.73. Their estimates are much more conservative which is why I recommend to buy, but to keep our holding relatively small.

PRICE TARGET SUMMARY

Mean Target: 89.73

Median Target: 90.00

High Target: 97.00

Low Target: 80.00

No. of Brokers: 11

4. Financials (numbers from May 8, 2007 report)

A. Income Statement1. Net Income increases during this quarter by 10.5% to $9.28B from $8.4B.2. Revenue decreased by 2%, from $88.98B to $87.22B

B. Balance Sheet1. Assets increased from $219.01B to $223.29B in 1st quarter of 2007. This is largely

due to an increase in inventories of crude oil.2. Stockholders’ Equity increased slightly from $113.8B to $114.1B during the 1st

Quarter of 2007.

5. The Economy

Rising price of oilThe price of oil continues to rise and isn’t expected to drop anytime in the near future, especially during the summer months. The world is largely powered by oil, so this is an

industry that has stayed very consistent over time and one that most analysts agree will just continue to experience healthy growth. .

Impending LegislationCongress is discussing legislation that would place a windfall tax on profits that oil companies make above a certain benchmark, most likely $40 per barrel. In the minds of legislators, this would keep oil companies from price gauging and would be a way to pressure them into supplying affordable gasoline.

Disposable IncomeIf disposable income decreases on average for Americans, then most people will cut down on travel and other leisure activities which would cut down on their consumption of gasoline.

6. RecommendationBUY

After close examination of Exxon Mobil, I believe that it is a very profitable company with a bright outlook for the future. Exxon has reported record profits in each of the past two fiscal years. With oil prices expected to continue increasing into the near future, there is no reason to expect Exxon’s profits to go down. I believe that in the short-term, the oil industry is where the greatest profits and returns can be made. This is why I recommend buying 200 shares of Exxon Mobil Corp. I believe that we will see great returns on this stock over the next few months and through the end of the year. One will notice that analysts agree that this is a good stock to hold in a portfolio as none of the analysts on Yahoo Finance recommend selling this stock.

RECOMMENDATION TRENDS

Current Month Last Month Two Months AgoThree Months

Ago

Strong Buy 6 6 6 6

Buy 3 3 5 5

Hold 11 11 8 9

Sell 0 0 0 0

Strong Sell 0 0 0 0

7. Appendices

A. Income Statement

PERIOD ENDING 31-Dec-06 31-Dec-05 31-Dec-04

Total Revenue 377,635,000   370,680,000   298,035,000  

Cost of Revenue 213,255,000   213,002,000   163,547,000  

Gross Profit 164,380,000   157,678,000   134,488,000  

Operating Expenses

Research Development -   -   -  

Selling General and Administrative 83,857,000   86,698,000   82,066,000  

Non Recurring -   -   -  

Others 11,416,000   10,253,000   9,767,000  

Total Operating Expenses -   -   -  

Operating Income or Loss 69,107,000   60,727,000   42,655,000  

Income from Continuing Operations

Total Other Income/Expenses Net -   -   (776,000)

Earnings Before Interest And Taxes 68,056,000   59,928,000   41,879,000  

Interest Expense 654,000   496,000   638,000  

Income Before Tax 67,402,000   59,432,000   41,241,000  

Income Tax Expense 27,902,000   23,302,000   15,911,000  

Minority Interest (1,051,000) (799,000) -  

Net Income From Continuing Ops 39,500,000   36,130,000   25,330,000  

Non-recurring Events

Discontinued Operations -   -   -  

Extraordinary Items -   -   -  

Effect Of Accounting Changes -   -   -  

Other Items -   -   -  

Net Income 39,500,000   36,130,000   25,330,000  

B. Balance Sheet

PERIOD ENDING 31-Dec-06 31-Dec-05 31-Dec-04

Assets

Current Assets

Cash And Cash Equivalents 32,848,000   33,275,000   23,135,000  

Short Term Investments -   -   -  

Net Receivables 28,942,000   27,484,000   25,359,000  

Inventory 10,714,000   9,321,000   9,487,000  

Other Current Assets 3,273,000   3,262,000   2,396,000  

Total Current Assets 75,777,000   73,342,000   60,377,000  

Long Term Investments 23,237,000   20,592,000   18,404,000  

Property Plant and Equipment 113,687,000   107,010,000   108,639,000  

Goodwill -   -   -  

Intangible Assets -   -   -  

Accumulated Amortization -   -   -  

Other Assets 6,314,000   7,391,000   7,836,000  

Deferred Long Term Asset Charges -   -   -  

Total Assets 219,015,000   208,335,000   195,256,000  

Liabilities

Current Liabilities

Accounts Payable 47,115,000   44,536,000   39,701,000  

Short/Current Long Term Debt 1,702,000   1,771,000   3,280,000  

Other Current Liabilities -   -   -  

Total Current Liabilities 48,817,000   46,307,000   42,981,000  

Long Term Debt 6,645,000   6,220,000   8,965,000  

Other Liabilities 21,047,000   20,181,000   17,129,000  

Deferred Long Term Liability Charges 24,858,000   24,441,000   24,425,000  

Minority Interest 3,804,000   -   -  

Negative Goodwill -   -   -  

Total Liabilities 105,171,000   97,149,000   93,500,000  

Stockholders' Equity

Misc Stocks Options Warrants -   -   -  

Redeemable Preferred Stock -   -   -  

Preferred Stock -   -   -  

Common Stock 4,786,000   5,743,000   5,067,000  

Retained Earnings 195,207,000   163,335,000   134,818,000  

Treasury Stock (83,387,000) (55,347,000) (38,214,000)

Capital Surplus -   -   -  

Other Stockholder Equity (2,762,000) (2,545,000) 85,000  

Total Stockholder Equity 113,844,000   111,186,000   101,756,000  

Net Tangible Assets $113,844,000   $111,186,000   $101,756,000  

C. Cash Flows

PERIOD ENDING 31-Dec-06 31-Dec-05 31-Dec-04

Net Income 39,500,000   36,130,000   25,330,000  

Operating Activities, Cash Flows Provided By or Used In

Depreciation 11,416,000   10,253,000   9,767,000  

Adjustments To Net Income (264,000) 288,000   (309,000)

Changes In Accounts Receivables (181,000) (3,700,000) (472,000)

Changes In Liabilities 1,160,000   7,806,000   6,333,000  

Changes In Inventories (1,057,000) (434,000) (223,000)

Changes In Other Operating Activities (1,288,000) (2,205,000) 125,000  

Total Cash Flow From Operating Activities 49,286,000   48,138,000   40,551,000  

Investing Activities, Cash Flows Provided By or Used In

Capital Expenditures (15,462,000) (13,839,000) (11,986,000)

Investments (1,848,000) (2,467,000) (1,074,000)

Other Cashflows from Investing Activities 3,080,000   6,036,000   (1,850,000)

Total Cash Flows From Investing Activities (14,230,000) (10,270,000) (14,910,000)

Financing Activities, Cash Flows Provided By or Used In

Dividends Paid (7,867,000) (7,478,000) (7,111,000)

Sale Purchase of Stock (28,878,000) (17,961,000) (9,206,000)

Net Borrowings 73,000   (1,502,000) (1,951,000)

Other Cash Flows from Financing Activities 462,000   -   -  

Total Cash Flows From Financing Activities (36,210,000) (26,941,000) (18,268,000)

Effect Of Exchange Rate Changes 727,000   (787,000) 532,000  

Change In Cash and Cash Equivalents ($427,000) $10,140,000   $7,905,000