Back to top

Analyst Blog

Zacks Equity Research

ExxonMobil (XOM) Enters into a Multi-Year Agreement with NBA


Trades from $3

Oil giant ExxonMobil Corporation (XOM - Analyst Report) recently announced that it has inked a multi-year agreement with the National Basketball Association (“NBA”). According to this deal, NBA will be ExxonMobil’s official marketing partner in the United States and China.

The partnership will be marketing ExxonMobil's Mobil 1 motor oil. Notably, this is the first major partnership between the flagship brand and a key sport other than motor racing. The financial terms of the deal have been kept under wraps.

We note that ExxonMobil advertised on the television during the Rio Olympics to highlight its work on clean energy in the midst of pressure to counter global warming. Hence, we expect the aforesaid deal to further benefit the company.

ExxonMobil is the world’s best run integrated oil company with an impressive track record of high return on capital employed. As the largest publicly traded oil company, ExxonMobil has long been a core holding for investors seeking defensive as well as continued dividend growth.


The OPEC’s decision to cut oil production amid an already oversupplied commodity market might help in oil price recovery. Since ExxonMobil’s production comprises a significant amount of oil, it will be able to sell the commodity at higher prices. This in turn will allow it to share more profits from its upstream business with its shareholders. Notably, ExxonMobil also has a huge base of chemical and refining operations that should continue to support growth even if its upstream operations underperform. The company’s existing oil and gas development project pipeline is among the best in the industry.

ExxonMobil’s strength lies in its balanced operations, strong financial flexibility and continuous efficiency and cost control. The company’s efforts to build an unconventional resource portfolio both in North America and overseas reflect its aim to increase production through higher exposure to large energy resources with long reserve life and low field declines. Despite the collapse in natural gas prices, ExxonMobil expects unconventional gas to play a dominant role in the future supplies owing to the rapid decline in conventional production. The company possesses more than 8 million unconventional acres in North America.

Some better-ranked players from the energy sector include Enviva Partners, LP (EVA - Snapshot Report) , NGL Energy Partners LP (NGL - Snapshot Report) and Evolution Petroleum Corp. (EPM - Snapshot Report) . Both these stocks sport a Zacks Rank #1 (Strong Buy).

Enviva Partners posted a positive earnings surprise of 20.51% in the preceding quarter.

NGL Energy Partners has a mixed earnings surprise history. The partnership posted positive earnings surprise in two of the last four quarters. It reported a positive earnings surprise of 1480.0% in the preceding quarter.

In the last reported quarter, Evolution Petroleum Corp. delivered a positive earnings surprise of 350.00%. Coming to the earnings surprise history, the company beat estimates in two of the last four quarters.

Confidential from Zacks

Beyond this Analyst Blog, would you like to see Zacks' best recommendations that are not available to the public? Our Executive VP, Steve Reitmeister, knows when key trades are about to be triggered and which of our experts has the hottest hand. Click to see them now>>