With shares of Exxon Mobil (NYSE:XOM) trading around $87, is XOM an OUTPERFORM, WAIT AND SEE or STAY AWAY? Let’s analyze the stock with the relevant sections of our CHEAT SHEET investing framework:

C = Catalyst for a Stock’s Movement

Exxon is a big player in the research, production and transportation of the crude oil and natural gas industry. The company recently lost the title of the largest company in the United States to Apple (NASDAQ:AAPL) but are quickly gaining momentum once again. As the world continues to develop, energy requirements are increasing, and Exxon Mobil is well positioned to take advantage of this. Look for the energy trend to continue and for Exxon Mobil to be on the head of it.

T = Technicals on the Stock Chart are Strong

Exxon Mobil is near all-time highs that were reached in 2007. The long-term chart shows how well investors in this company have done. Overall, higher highs and higher lows dominate the price of this stock. On a breakout above the all-time highs, it’s clear skies. It has had a large but orderly run and is pausing near these $90 levels, but it may get going once it digests its gain. There is really nothing bad one can say about the price action of Exxon Mobil’s stock.

Identifying a trend can be more easily done with the use of moving averages. In specific, a stock price’s position relative to the order and direction of these key simple moving averages can help determine the trend and its strength. The key moving averages are 50-day, 100-day and 200-day. Exxon Mobil is consolidating around its key moving averages, and they are not yet leaning in any direction. What does this mean? The stock is range bound for now as it digests gains. Once it is ready to move, look for the moving averages to follow.

Now, investor sentiment is also key to the success of a stock. One way to gain perspective into investor sentiment is through the use of the options market. More specifically, taking a look at the implied volatility and implied volatility skew levels of Exxon Mobil options may help determine if investors are bullish, neutral or bearish. The implied volatility of Exxon Mobil options is at 19.61 percent today and which coincides with a 93rd percentile over the last 30 trading days and 87th percentile over the last 90 trading days. What does this mean? This means that investors or traders are buying a significant amount of protection compared to the last 30 and 90 trading days. This is common in stocks that are digesting and stuck in a range. The implied volatility skew of March and April put options is flat, while call option skew is at about average. Now, what does this mean? As of today, there is a low demand from call buyers or high supply of call sellers, while there is high demand by put buyers or low demand by put sellers, all neutral to bearish over the next 2 months. So investors are buying a significant amount of protection and leaning neutral to bearish over the next 2 months.

E = Earnings Are Increasing Quarter-Over-Quarter

A mature company, such as Exxon Mobil, is not affected by earnings and revenue growth figures as much as a pure growth company. However, investors still expect the company to grow. The last 8 quarterly earnings yoy numbers have been: 11.68 percent, -1.88 percent, 56.42 percent, -6.54 percent, 6.49 percent, 47.92 percent, 36.25 percent, and 60.90 percent, respectively. The revenue growth yoy figures for the same quarters have been: -5.29 percent, -7.68 percent, 1.5 percent, 8.81 percent, 15.61 percent, 31.51 percent, 35.68 percent, and 26.32 percent.

More importantly, did these numbers fancy investors? Let’s take a look at the last 4 quarterly earnings announcement reactions in order to determine investor sentiment on Exxon Mobil’s stock. The last 4 quarters have seen next trading session returns of 0.07%, 0.47%, 1.49%, and -0.89%. It is clear that the markets felt good and have priced-in most of the earnings announcements.

E = Excellent Relative Performance Versus Peers and Sector

Exxon Mobil stock has been a consistent outperformer relative to the entire stock market over the last few years. How has it done against its peers and industry? As of today, Exxon Mobil is displaying a -1.08 percent year-to-date. Its closest competitors, BP (NYSE:BP), Chevron (NYSE:CVX), Royal Dutch Shell (NYSE:RDS) and industry are returning -4.76 percent, 2.92 percent, -6.7 percent, and 3.97 percent, respectively. So, Exxon Mobil is not doing as well as it should be, relative to its peers.


Exxon Mobil has provided investors with significant returns over the years and the price chart is evidence of that. Poised to take out all-time highs, the stock is currently resting as it digests recent gains. Common in ranging prices, the options market is hedging the downside and selling the upside. Earnings and revenue growth rates are meeting expectations, so look for this to continue as the world demand for energy increases. Relative to its peers, the stock isn’t doing so well, so look for it to play catch-up. Once the digestion is complete, look for Exxon Mobil stock to OUTPERFORM.

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