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ConocoPhillips vs. ExxonMobil: Which Energy Stock Is a Better Buy?
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Key Takeaways
ExxonMobil's integrated model gives it an edge over ConocoPhillips amid softer oil prices.
COP faces pressure as EIA sees WTI averaging $53.42, below $65.40 in 2025.
XOM trades at 9.72X EV/EBITDA vs COP's 5.96X, reflecting a premium for stability.
ConocoPhillips (COP - Free Report) and Exxon Mobil Corporation (XOM - Free Report) are two of the leading exploration and production firms in the energy space, with each boasting an impressive portfolio of low-cost production assets. Over the past year, XOM has rallied 35.4%, outperforming COP’s 11.1% gain. Let us take a closer look at the fundamentals of both stocks to determine which one is the better choice at present.
Image Source: Zacks Investment Research
While price gains demonstrate the attractiveness of any stock, it would be wiser to evaluate the fundamentals and overall business environment of both stocks before making an investment decision.
Is the Current Oil Price Environment Beneficial for COP?
ConocoPhillips is a leading exploration and production company with a durable and diverse portfolio of assets, particularly in the U.S. Lower 48. Since the company is primarily involved in the upstream sector, its financial performance depends heavily on the oil and gas pricing environment.
According to the U.S. Energy Information Administration (“EIA”), the price of West Texas Intermediate (“WTI”) crude is expected to average $53.42 per barrel, below $65.40 per barrel in 2025, with further price declines projected in 2027. The supply-demand imbalance in the oil market, driven by OPEC+ production increases and potentially higher supply from Venezuela, hurts crude prices. Although ConocoPhillips has a strong portfolio of assets in the shale basins of the United States, including the Delaware Basin, Midland Basin, Eagle Ford and Bakken shale that support low-cost production, softer crude prices are expected to hurt the company’s bottom line.
ExxonMobil’s Integrated Business Model Supports Profitability
ExxonMobil generates a major portion of its earnings from its upstream activities. The integrated nature of its business shields earnings volatility across various market cycles. Apart from exploration and production activities, XOM has a presence in refining, as well as chemicals and specialty products.
When crude prices are relatively weaker, its refining operations enable it to capitalize on lower prices and generate profits. Lower crude prices imply cheaper feedstock for XOM’s refineries, which supports refining gains. This acts as a cushion to the company’s profitability when its upstream business is affected by lower oil prices. The company boasts a strong balance sheet with low debt exposure that enables it to navigate a challenging business environment and improve overall financial resilience.
COP vs. XOM: Which Stock to Bet On?
While the exposure to softer crude prices is expected to hurt both companies this year, XOM is anticipated to sail through by relying on its integrated business model that can sustain profits even in a relatively unfavorable business environment. XOM’s debt-to-capitalization of 11.4% is significantly lower than the sub-industry average. COP has a debt-to-capitalization ratio of 26.66%.
Image Source: Zacks Investment Research
Considering the valuation snapshot, it has become evident that investors are now willing to pay a premium for ExxonMobil over ConocoPhillips, due to its integrated business that provides greater stability than ConocoPhillips, whose business solely focuses on upstream activities. This is reflected in the fact that XOM trades at a trailing 12-month enterprise value to EBITDA (EV/EBITDA) of 9.72X, above COP’s 5.96X.
Image Source: Zacks Investment Research
Thus, investors who are risk-averse and prefer stability can continue to hold XOM stock, carrying a Zacks Rank #3 (Hold) at present. Furthermore, given the current commodity price environment, investors may avoid owning the COP stock, which has a Zacks Rank #4 (Sell). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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ConocoPhillips vs. ExxonMobil: Which Energy Stock Is a Better Buy?
Key Takeaways
ConocoPhillips (COP - Free Report) and Exxon Mobil Corporation (XOM - Free Report) are two of the leading exploration and production firms in the energy space, with each boasting an impressive portfolio of low-cost production assets. Over the past year, XOM has rallied 35.4%, outperforming COP’s 11.1% gain. Let us take a closer look at the fundamentals of both stocks to determine which one is the better choice at present.
While price gains demonstrate the attractiveness of any stock, it would be wiser to evaluate the fundamentals and overall business environment of both stocks before making an investment decision.
Is the Current Oil Price Environment Beneficial for COP?
ConocoPhillips is a leading exploration and production company with a durable and diverse portfolio of assets, particularly in the U.S. Lower 48. Since the company is primarily involved in the upstream sector, its financial performance depends heavily on the oil and gas pricing environment.
According to the U.S. Energy Information Administration (“EIA”), the price of West Texas Intermediate (“WTI”) crude is expected to average $53.42 per barrel, below $65.40 per barrel in 2025, with further price declines projected in 2027. The supply-demand imbalance in the oil market, driven by OPEC+ production increases and potentially higher supply from Venezuela, hurts crude prices. Although ConocoPhillips has a strong portfolio of assets in the shale basins of the United States, including the Delaware Basin, Midland Basin, Eagle Ford and Bakken shale that support low-cost production, softer crude prices are expected to hurt the company’s bottom line.
ExxonMobil’s Integrated Business Model Supports Profitability
ExxonMobil generates a major portion of its earnings from its upstream activities. The integrated nature of its business shields earnings volatility across various market cycles. Apart from exploration and production activities, XOM has a presence in refining, as well as chemicals and specialty products.
When crude prices are relatively weaker, its refining operations enable it to capitalize on lower prices and generate profits. Lower crude prices imply cheaper feedstock for XOM’s refineries, which supports refining gains. This acts as a cushion to the company’s profitability when its upstream business is affected by lower oil prices. The company boasts a strong balance sheet with low debt exposure that enables it to navigate a challenging business environment and improve overall financial resilience.
COP vs. XOM: Which Stock to Bet On?
While the exposure to softer crude prices is expected to hurt both companies this year, XOM is anticipated to sail through by relying on its integrated business model that can sustain profits even in a relatively unfavorable business environment. XOM’s debt-to-capitalization of 11.4% is significantly lower than the sub-industry average. COP has a debt-to-capitalization ratio of 26.66%.
Considering the valuation snapshot, it has become evident that investors are now willing to pay a premium for ExxonMobil over ConocoPhillips, due to its integrated business that provides greater stability than ConocoPhillips, whose business solely focuses on upstream activities. This is reflected in the fact that XOM trades at a trailing 12-month enterprise value to EBITDA (EV/EBITDA) of 9.72X, above COP’s 5.96X.
Image Source: Zacks Investment Research
Thus, investors who are risk-averse and prefer stability can continue to hold XOM stock, carrying a Zacks Rank #3 (Hold) at present. Furthermore, given the current commodity price environment, investors may avoid owning the COP stock, which has a Zacks Rank #4 (Sell). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.