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Exxon Mobil (XOM) - Piotroski F-Score Analysis for Year 2023 (Final Score: 6/9)

Detailed Piotroski F-Score Analysis of Exxon Mobil (XOM) for 2023, highlighting financial health across profitability, liquidity, and operational efficiency.

Knowledge hint:
The Piotroski F-Score is a number between 0 to 9 which reflects the strength of a company's financial position. It is based on 9 criteria involving profitability, liquidity, and leverage. This model helps investors identify stocks that are strong, undervalued investments.
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Short Analysis - Piotroski Score: 6

We're running Exxon Mobil (XOM) against the Piotroski 9-criteria scoring system to assess profitability, liquidity, and operating efficiency:

Criteria
Company has a positive net income?
1
Company has a positive cash flow?
1
Return on Assets (ROA) are growing?
0
Operating Cashflow are higher than Netincome?
1
Leverage is declining?
1
Current Ratio is growing?
1
Number of shares not diluted?
1
Cross Margin is growing?
0
Asset Turnover Ratio is growing?
0

The Piotroski F-Score analysis for Exxon Mobil (XOM) results in a score of 6 out of 9, indicating a moderately strong financial position. Key highlights include positive net income and cash flow from operations, an improvement in the current ratio, and a decrease in the number of shares outstanding, which all contribute positively to the score. However, declines in ROA, leverage position, gross margin, and asset turnover ratio are areas of concern. These mixed results suggest that while Exxon Mobil shows robust financial health in certain areas, there are aspects of its efficiency and debt management that could be improved.

Insights for Value Investors Seeking Stable Income

Given the Piotroski F-Score of 6/9, Exxon Mobil (XOM) demonstrates a reasonably strong financial position, making it a potentially good investment opportunity. However, potential investors should be cautious due to identified areas of concern, particularly the decrease in ROA, increasing leverage, and declining efficiency ratios. For those willing to invest, it's crucial to monitor these factors closely and consider Exxon Mobil within the context of a diversified portfolio.

For those who are interested in delving deeper into the specifics, the subsequent section provides a comprehensive exploration of the criteria.

Profitability of Exxon Mobil (XOM)

Company has a positive net income?

Net income represents the profitability of a company after all expenses have been deducted from revenues. A higher positive net income suggests better financial health.

Historical Net Income of Exxon Mobil (XOM)

In 2023, Exxon Mobil (XOM) reported a net income of $36.01 billion, which is a positive figure. Over the last 20 years, the company has demonstrated consistent profitability with only one year, 2020, showing a negative net income of -$22.44 billion. Apart from this anomaly caused by the global pandemic, the net income trend has remained strong, signaling robust financial health for Exxon Mobil. This criterion is met, and hence, 1 point is awarded.

Company has a positive cash flow?

Cash Flow from Operations (CFO) evaluates a company’s ability to generate cash from its core operating activities, reflecting its financial health.

Historical Operating Cash Flow of Exxon Mobil (XOM)

Exxon Mobil has consistently shown robust cash flow from operations over the last 20 years. In 2023, the CFO is positive at $55.37 billion. Comparing this to prior years, such as $76.80 billion in 2022 and even $14.67 billion in 2020, the trend indicates a cyclical but formidable cash-generating capacity. The 2023 figure earns Exxon Mobil 1 point. Such sustained CFO underscores the firm's operational efficiency and cash-generating prowess, thus projecting a financially sound outlook.

Return on Assets (ROA) are growing?

Change in ROA measures the difference in Return on Assets from one period to another. It's important because it indicates how effectively the company is utilizing its assets to generate earnings.

Historical change in Return on Assets (ROA) of Exxon Mobil (XOM)

For Exxon Mobil (XOM), the ROA decreased from 0.1575 in 2022 to 0.0966 in 2023. This decline in ROA is indicative of the company becoming less efficient in generating profit from its assets year-over-year. Moreover, examining the historical trend reveals that over the past 20 years, Exxon Mobil’s highest ROA aligns with industry medians, but the current decline pulls it below historical norms. The current ROA of 0.0966 is far below the industry median of 0.229 in 2023, highlighting a performance gap that could raise concerns among investors. Overall, the downward trend in ROA qualifies for zero points in the Piotroski Analysis criteria.

Operating Cashflow are higher than Netincome?

A higher operating cash flow compared to net income suggests higher actual cash generation, indicating earnings quality and operational efficiency.

Historical accruals of Exxon Mobil (XOM)

For the fiscal year 2023, Exxon Mobil's operating cash flow amounted to $55.37 billion, significantly surpassing its net income of $36.01 billion. This discrepancy showcases Exxon Mobil's robust cash generation capabilities, adding a 1 point to the Piotroski score. Historically, over the last 20 years, this trend is not uncommon for Exxon; for example, in 2008 and 2011, operating cash flow was significantly higher than net income, reflecting a consistent pattern of effective cash management. This is a positive indicator as higher operating cash flow offers greater assurance that earnings are not just on paper but are being translated into actual cash, essential for covering operational costs, debt obligations, and reinvestments.

Liquidity of Exxon Mobil (XOM)

Leverage is declining?

Assessing leverage involves looking at the ratio of debt to equity. A lower leverage usually suggests better financial health and lower financial risk for the company.

Historical leverage of Exxon Mobil (XOM)

In the case of Exxon Mobil (XOM), the leverage has increased from 0.0996 in 2022 to 0.1099 in 2023. This indicates that the company has increased its debt levels relative to its equity. Over the last 20 years, leverage has seen considerable fluctuations, peaking notably in 2020 at 0.1418, likely influenced by pandemic-induced economic conditions. While the recent increase isn't as drastic as past peaks, it does not garner a positive point in the Piotroski score, marking a step in the wrong direction for financial stability.

Current Ratio is growing?

A company's current ratio measures its ability to cover short-term liabilities with short-term assets. A higher ratio indicates better liquidity.

Historical Current Ratio of Exxon Mobil (XOM)

Exxon Mobil's current ratio increased from 1.414 in 2022 to 1.4791 in 2023. This improvement indicates a positive trend in the company's liquidity position. Historically, Exxon Mobil's current ratio has significantly increased from 1.1973 in 2003 to the current level, surpassing the 20-year industry median of 1.3004 readily. This upwards trend affords Exxon an incremental strength to meet its short-term obligations, thus earning a commendable 1 point.

Number of shares not diluted?

The criterion for evaluating the change in shares outstanding involves comparing the number of shares from one period to another. This is crucial because decreasing shares can indicate share buybacks, enhancing shareholder value.

Historical outstanding shares of Exxon Mobil (XOM)

In 2022, Exxon Mobil had 4,205,000,000 outstanding shares, which decreased to 4,050,618,673 in 2023. This represents a reduction in outstanding shares. Therefore, we award 1 point for this criterion. Historically, analyzing the company's trend: the number of shares steadily decreased from 2003 to 2023, moving from over 6.6 billion shares to just above 4 billion shares. This consistent decline suggests ongoing share repurchases, beneficial for shareholders as these buybacks can enhance earnings per share (EPS) and potentially increase stock valuations. Exxon Mobil, through this reduction in shares, signals strong financial health and commitment to returning capital to shareholders.

Operating of Exxon Mobil (XOM)

Cross Margin is growing?

The change in Gross Margin is evaluated by comparing current year's gross margin to the previous year's. It indicates the company's ability to manage cost of goods sold.

Historical gross margin of Exxon Mobil (XOM)

Exxon Mobil's Gross Margin decreased slightly from 0.2585 in 2022 to 0.2514 in 2023, which constitutes a reduction. Therefore, no point is added in this criterion. Notably, the Gross Margin for both years was above the industry's median (0.2581 in 2022 and 0.2290 in 2023) suggesting that despite the slight decrease, Exxon Mobil managed better gross margins compared to the industry standard during these years.

Asset Turnover Ratio is growing?

Asset Turnover assesses a firm's efficiency in using its assets to generate revenue. Higher ratios indicate better performance and operational efficiency.

Historical asset turnover ratio of Exxon Mobil (XOM)

In 2023, Exxon Mobil's asset turnover ratio was 0.8981, a decrease from 1.1262 in 2022. This indicates a decline in the company's efficiency in utilizing its assets to generate revenue. The trend is negative, highlighting potentially lower operational efficiency or increased asset base without a corresponding rise in revenue. Historically, the ratio has seen fluctuations, peaking in 2008 at 2.0307 and reaching a nadir of 0.5136 in 2020. This broader historical context underlines the variability in Exxon Mobil's asset utilization efficiency. Despite the dip, the 2023 ratio is still above the historic low observed a few years prior.


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