Exxon Mobil Security Analysis: Macroeconomic and Industry Analyses
Do ONLY Macroeconomic and Industry Analyses Question D and E which are
(d) Firm Position: you need to document the position of the firm within the context of the industry based on news reports, management discussion as well as analysts' reports from a size/revenue/expansion point of view, i.e., you should be comparing the firm with its closest competitors which you need to name (Chevron and ConocoPhillips in our case). Please, check the databases that are available on the University Libraries' website.
(e) Economic Advantages: given the company's current position in the industry and its abilities to capitalize on industry trends or its incoming inabilities to do so, you should talk about relevant innovations, contracts, business relationships, position vis-à-vis current and projected industry regulatory changes, patent protection situation, etc. In this section, the analysis need not be too detailed but must emphasize the main economic factors in the current economy. It matters more that you describe the firm's economic activity and the current climate in the specific industry: orders falling, new technology, consolidation, or other significant developments affecting the industry. Don't forget to mention the firm's economic disadvantages as well.
https://drive(dot)google(dot)com/drive/folders/1dNBktIW9YXMIpjuqilYI8MV93bOTKg75?usp=sharing
Here are some financial about the firm if you needed.
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Exxon Mobil Security Analysis
Exxon Mobil is a giant in the oil and petroleum industry and has existed since 1879 when John Rockefeller founded the company has Standard Oil. Since then, the company has had immense success and dominated the oil industry. Exxon, Mobil, and Chevron were the outcome of breaking up Standard Oil in the early 1900s (Mitkowski 1). Exxon with Mobil merged for ExxonMobil after 1999 (Mitkowski 1). The company is involved both in the downstream and upstream processes. Upstream involves the exploration of new oil and gas deposits, while downstream entails the refining and marketing of petroleum products.
An analysis of the financial statement reveals that Exxon Mobil is relatively competitive in the petroleum industry. Looking at the profitability ratios, the company posted a gross profit margin of 30.9 percent, an operating margin of 8.4 percent, a pre-tax margin of 11.29 percent, and an 8.51 percent in net profit margin. However, its performance is below its competitors, Chevron and ConocoPhillips. Chevron posted gross margins of 42.67 percent, an operating margin of 11.35 percent, a pre-tax margin of 13.88 percent, and a 10 percent net profit margin. Whereas ConocoPhillips emerged as the topmost profitable company among the three. In addition, Exxon's performance was below the industry average in gross margin and operating margin. While both Chevron and ConocoPhillips performed the industry average in all the metrics. Despite Exxon's below-average performance, it remained profitable while the industry experienced net loss margins.
Regarding the efficiency ratio in appendix A, ExxonMobil has shown better efficiency than Chevron but performed less efficiently than ConocoPhillips. While Exxon's utilization of assets was 14 percent, ConocoPhillips posted 21.47 percent. The return o asset of ExxonMobil stood at 7 percent, while ConocoPhillips registered 10.54 percent. Similarly, the return on investment on ExxonMobil was 8.65 percent compared to 11.89 percent in ConocoPhillips. ExxonMobil's performance was fairly at the industry average, while ConocoPhillips exceeded the industry's average by significant margins. Exon Mobil is better in asset utilization than both Chevron and ConocoPhillips. Its performance is also above the industry average. ExxonMobil has the lowest inventory turnover but is above the industry average, while ConocoPhillips has the highest. ExxonMobil DuPont's analysis reveals a fairly strong return on Equity, better than Chevron but weaker than ConocoPhillips. ConocoPhillips seems to have stellar performance against its competitors. However, its efficiency is primarily fueled by debt. Chevron has the lowest total debt-to-equity ratio compared to the three. ExxonMobil comes second with above industry average performance.
ExxonMobil's significant advantage over competitors is integrating both upstream and downstream operations. Hence its asset turnover is exceptionally high than its competitors. The company can remain profitable while the industry operates in net loss margins because it can utilize the high-profit margins from upstream operations while still benefiting from thin margins downstream. Despite ExxonMobil being a huge company at the maturity stage, it can still have a relatively high equity multiplier than small companies (in terms of net worth) in the growth phase. ExxonMobil's return on investment and Equity significantly prove that it is highly successful than its competitors.
Moreover, the industry is under threat from unfriendly regulations. The United States government has passed regulations on the need to have efficient technologies in the consumption and production of cleaner energy (Mitkowski 2). Therefore, big corporations are spending...