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Why ExxonMobil's Strong Balance Sheet Matters for Investors
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Key Takeaways
XOM earns most profit upstream, leaving results exposed to swings in oil and natural gas prices.
XOM's debt-to-capitalization is 15.44%, limiting debt exposure when energy prices fall.
Low leverage helps XOM borrow on favorable terms, fund acquisitions and keep rewarding shareholders.
Exxon Mobil Corporation (XOM - Free Report) is an integrated energy giant, but generates the bulk of its earnings from the upstream operations. With a strong presence in the prolific Permian Basin and offshore Guyana resources, its top and bottom lines are highly vulnerable to fluctuations in oil and natural gas prices.
But investors should not worry much about this vulnerability since ExxonMobil has a strong balance sheet. With a debt-to-capitalization of 15.44%, the integrated energy giant has significantly lower exposure to debt capital. Thus, the company can rely on its strong balance sheet when oil and natural gas prices turn low and the business scenario becomes unfavorable.
Also, with lower exposure to debt capital, XOM can secure additional debt on favorable terms during uncertain situations, allowing it to operate smoothly, pursue lucrative acquisitions and continue rewarding shareholders.
CVX & EOG Also Have Low Debt Load
Chevron Corporation (CVX - Free Report) and EOG Resources Inc. (EOG - Free Report) , both having robust balance sheets, can also sail through an unfavorable business environment due to their strong financials. While CVX has a debt-to-capitalization of 19.35%, EOG’s debt-to-capitalization stands at 20.42%.
XOM’s Price Performance, Valuation & Estimates
Shares of XOM have gained 43.6% over the past year compared with the 43.3% improvement of the industry.
Image Source: Zacks Investment Research
From a valuation standpoint, XOM trades at a trailing 12-month enterprise value to EBITDA of 9.73X. This is above the broader industry average of 6.34X.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for XOM’s 2026 earnings has seen upward revisions over the past 30 days.
View the Zacks #1 Rank List
Image: Bigstock
Why ExxonMobil's Strong Balance Sheet Matters for Investors
Key Takeaways
Exxon Mobil Corporation (XOM - Free Report) is an integrated energy giant, but generates the bulk of its earnings from the upstream operations. With a strong presence in the prolific Permian Basin and offshore Guyana resources, its top and bottom lines are highly vulnerable to fluctuations in oil and natural gas prices.
But investors should not worry much about this vulnerability since ExxonMobil has a strong balance sheet. With a debt-to-capitalization of 15.44%, the integrated energy giant has significantly lower exposure to debt capital. Thus, the company can rely on its strong balance sheet when oil and natural gas prices turn low and the business scenario becomes unfavorable.
Also, with lower exposure to debt capital, XOM can secure additional debt on favorable terms during uncertain situations, allowing it to operate smoothly, pursue lucrative acquisitions and continue rewarding shareholders.
CVX & EOG Also Have Low Debt Load
Chevron Corporation (CVX - Free Report) and EOG Resources Inc. (EOG - Free Report) , both having robust balance sheets, can also sail through an unfavorable business environment due to their strong financials. While CVX has a debt-to-capitalization of 19.35%, EOG’s debt-to-capitalization stands at 20.42%.
XOM’s Price Performance, Valuation & Estimates
Shares of XOM have gained 43.6% over the past year compared with the 43.3% improvement of the industry.
Image Source: Zacks Investment Research
From a valuation standpoint, XOM trades at a trailing 12-month enterprise value to EBITDA of 9.73X. This is above the broader industry average of 6.34X.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for XOM’s 2026 earnings has seen upward revisions over the past 30 days.
Image Source: Zacks Investment Research
ExxonMobil stock currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.