ExxonMobil Corporation (XOM - Free Report) recently announced its decision to appoint Darren Woods as the chairman and CEO. Woods would succeed Rex Tillerson, who is stepping down from the position after President-elect Donald Trump put forth his name as secretary of state. The company’s stock price has moved at a slower pace than the Zacks categorised Zacks sub industry Oil & Gas-International Integrated Market, over the past one month. While ExxonMobil has gained 5.6%, the broader market has increased by 10.3%. The impact of the aforesaid development on the stock price remains to be seen.
Woods has been associated with ExxonMobil for nearly 25 years. Woods earned a good reputation in ExxonMobil's refinery and chemicals businesses and emerged as Tillerson's potential successor a year ago, when he was named president and joined the board of directors.
On Dec 14, the company announced that Woods would take over the top spot on Jan 1. Tillerson was expected to retire in early 2017, when he will turn 65 – the mandatory retirement age at ExxonMobil. His selection by Trump for the nation's top diplomatic job – subject to Senate approval – brought his retirement forward.
Most analysts expect the change in leadership to be smooth. However, a few substantial changes in policy or leadership style are expected under Woods. Given that ExxonMobil is the world's largest publicly traded oil company, the strategic decisions have been taken with a long time frame in view.
The Irving, TX-based company is known for making a guarded, systematic approach to decision making. Hence, changes at the company are usually gradual and well thought out.
In 2006, Tillerson was appointed the CEO of the company, replacing long-time CEO Lee Raymend. He has led ExxonMobil during the most turbulent periods in its history, such as the financial crisis of 2008 led to a downfall in oil prices. Crude recovered, only to fall again beginning in mid-2014 because of worldwide oversupply.
ExxonMobil has cash in hand of $5 billion and a stock-market value of $375 billion. Per an analyst, Woods is likely to take advantage of lower values in the oil industry to grow by making one or two major acquisitions.
Some of the biggest challenges that Woods is faced with is dealing with low crude prices, and geopolitics, comprising U.S. approvals against Russia, where ExxonMobil has a joint venture with state oil firm – Rosneft.
As CEO, Tillerson signed a multi-billion-dollar deal to discover oil in Russia's Arctic, only to see the project slowing down when the U.S. and European allies slapped sanctions on Russia for capturing Crimea from Ukraine. According to analysts, Tillerson overpaid for XTO Energy in 2009. The deal made ExxonMobil the biggest natural gas producer in the U.S. but did not match market expectations owing to continuing low gas prices.
ExxonMobil made a record profit of $45.2 billion in 2008 and the level remained almost unchanged in 2012. Since then, however, the company has recorded lower profitability. The company’s profit level dropped to $16.2 billion in 2015 – a huge sum but ExxonMobil's smallest gain since 2002.
The company lost its desired AAA credit rating earlier this year. In 2016, its stock price has climbed 16%, but rival Chevron Corp.'s (CVX) shares have gained about twice as much.
ExxonMobil currently has a Zacks Rank #3 (Hold). Some better-ranked players in the same sector include SunCoke Energy Inc. (SXC - Free Report) , Suncor Energy, Inc. (SU - Free Report) and Futurefuel Corp. . All these stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
SunCoke Energy posted a positive earnings surprise of 177.78% in the last reported quarter. It reported a positive earnings surprise in three of the four preceding quarters.
Suncor Energy posted a positive earnings surprise of 300.00% in the preceding quarter. It reported an average earnings surprise of 40.55% for the four preceding quarters.
Futurefuel Corp. posted a positive earnings surprise of 20.83% in the last reported quarter. It reported a positive earnings surprise in all of the four preceding quarters.
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