Free Essay

Xom Analysis

In: Business and Management

Submitted By steph519
Words 2104
Pages 9
Our company and stock of choice is Exxon Mobil Corporation (ticker: XOM, NYSE). Exxon Mobil is a U.S. based publically traded oil and gas distributor that operates domestically as well as globally, and is one of the most well known companies within the industry. Currently, Exxon Mobil is the world’s largest publicly held oil and gas corporation, and also ranks as the second largest publicly held company across the globe, as classified by market capitalization, just behind Apple Inc. In addition to its high market capitalization, the corporation also falls within the top ten revenue-generating companies across the globe.
We have chosen to scrutinize this particular industry and stock due to shared interests in the technological advancements of hydraulic fracturing, or “fracking”, and how this technology affects Exxon’s current market price and overall company growth. Given these new technologies within the industry, we will utilize various valuation models to assess Exxon Mobil’s financial records and share data in order to determine whether their current market price is an accurate representation of intrinsic value, and also to assess company outlook. We will use XOM as a potential investment vehicle, in hopes to ascertain a better understanding of the company and to best predict what’s in store for Exxon Mobil as well as the oil and gas industry. As mentioned before, “fracking” has been prominent. Hydraulic fracturing, which emerged around 2005, has given the United States precedence in the oil and gas industry. In 2013, the Economist stated that “America is expected to overtake Russia and Saudi Arabia to become the world’s largest producer of oil and gas combined”. Although this technology has enormously sped up gas production and output, it does have negative ramifications as well. Shale oil production has caused oil prices to drop significantly, and allows us to question whether this technology can thrive at low costs. “Optimists argue that the fast decline rate has come as no surprise, and that the technology, and the industry’s experience in deploying it efficiently, are improving fast enough to mitigate much of the effect of weak prices” (The Economist). Although some analysts remain positive, there is solid evidence that proves low prices are hurting the industry. As of October 2014, the amount of active rigs U.S. has declined reaching its lowest number in six weeks: 1590. (OilPrice). Low costs have not proved fruitful enough to support the rigorous demands of the oil industry; thus, the outlook for the industry is an ambivalent state. With “fracking” not even 10 years old, only time will indicate whether shale oil production will stay alive.
The positives and negatives of “fracking” do not only affect Exxon Mobil, but also affects its major competitors. Some of which include BP (BP), Chevron Corp. (CVX), and Royal Dutch Shell (RDS). Other economical factors that hold influence on Exxon as well as its competition include the production of electric vehicles. Although manufacturing of electric cars has not swarmed the nation at an accelerated pace, its something the industry should not ignore. In the past the oil industry along with its supporters have set forth campaigns against electric cars; thus, even though only a fraction of Americans own hybrid vehicles, the industry is preparing, and fighting back.
The fundamental industry outlook for the integrated oil & gas industry is neutral. Integrated oils usually offer strong dividend and buyback potential. However, current crude oil prices will not recover quickly from the affected and relatively sudden decline that began in late 2014 and beginning 2015. Production growth has been difficult, but we think project start-ups and natural gas and LNG growth, particularly in Asia, will drive growth over the next five years. Likewise, The International Energy Agency (IEA) estimates that global oil demand should rise by 1.0 million barrels per day (MMb/d) in 2015 to 93.5 MMb/d. With non-OPEC production on the rise, projected to grow 0.7 MMb/d in 2015 to 57.4 MMb/d, and the expectation is the call on OPEC to stay flat at 29.5 MMb/d.
Financial ratios are foundational to comparing and understanding a firm’s operations. These ratios can allow us to compare multiple companies. Within this market BP serves as a viable contender for control of the public market share. Exxon is expected to earn $3.65 in 2015 and $5.12 for 2016 as it relates to earnings per share (XOM Earnings Forecast, 2015). BP will by contrast only rate an earnings per share of $2.03 and $2.96 for 2015 and 2016, respectively (CNN, 2015). Both of these coincide with our initially temporary falling growth rate due to the current market landscape. We utilized the Dividend Discount Model, Operating Free Cash Flow, and the Free Cash Flow to Equity models in order to gain a comprehensive understanding and valuation of XOM. An average of these three models was then compared against the most recent market price of $86.93 so as to determine intrinsic value and worth. This average valuation came in at $79.41: a difference of $7.52. In order to assess current value future projections were made. Each model in turn required different projections so as to determine XOM’s market price. To that end we will highlight the various suppositions made. WACC serves as the foundation that affects nearly all of these valuation methods. To that end we must ensure that the weighted average cost of capital is as accurate as possible going into the future. The three primary projections made were the corporate tax bracket, beta, and XOM’s capital structure. With oil prices falling and revenue decreasing, it is of our opinion that XOM will not be in that higher tax bracket. As it applies to beta, as renewable energies continue to expand and legislation is written regarding fuel and oil efficiency, the oil market will become increasingly volatile. Finally, XOM has hovered near a capital structure of 90% equity to 10% debt. We expect this trend to largely continue. Once WACC has been determined we can proceed to DDM. DDM required projections for a terminal growth rate, ROE, and retention rate. We expect the terminal growth rate to decrease to a level below that of the natural market growth rate. As oil slowly transitions to renewable sources we anticipate a gradual growth to that of less than the market. This slow growth will require XOM to repurchase stock to increase ROE so as to create value for their shareholders. Finally, we speculate that XOM will slowly increase their retention rate by 5%. This value will allow them to pursue other options as the market for oil slowly decreases. In the end DDM calculated market price to be $70.95. Moving on toward the Operating Free Cash Flow calculations there is primarily one variable that is outside of Exxon’s control: sales growth. As the “fracking” boom slowly comes to a close over the next few years we anticipate Exxon slowly regaining more of the market share to eventually coming to a low, albeit, positive growth rate. The other projections utilized for this valuation method, (CAPEX/sales, W/C % of sales, non-cash expense of sales), are already minimal in value through the nature of their business and the lean operations of the firm. This method provided us with a value of $12.09. Our final valuation method was the Free Cash Flow to Equity. Projections required were growth rate and net income margin. Since growth rate was discussed previously we will focus on the net income margin. Exxon will require of their firm drastic measures in order to remain competitive and create value for their shareholders. This is already evidenced by the oil firms purchasing other firms in order to generate cash flows for their shareholders. To that end we speculate they will through necessity be required to double their net income profit margin. Such a measure will not be easy- yet it will provide them with content shareholders and a stable source of equity.
Our recommendation is to HOLD Exxon Mobil Corporation (XOM). Primary, the merger of oil and gas assets and production volumes, we estimate that XOM is the largest publicly traded integrated oil company in the world, serving customers in over 200 countries. XOM maintains the largest portfolio of proved reserves and production in North America, and is the biggest net producer of oil and gas in Europe. In addition, Exxon Mobil employs edge-oil technology such as fracking, which has proven to XOM generates future earnings growth in the short and long-term. Finally, Exxon Mobil’s fundamental and financial performance has performed better than industry during the past five years. However, currently low oil prices remain a negative factor affecting not only Exxon Mobil price shares but also the entire oil/gas industry. Q1/2015 expected earnings on 4/30/15.
Based on our fundamental valuation of the company, financial performance and other key drivers such as strategic projects, developments and industry outlook, we may conclude that Exxon Mobil’s price share, created in 1999 as a merge, is in-line with our recommendation to HOLD. Positive factors such as strong earnings, financial ratios, capitalization, low levels of financial leverage, new developments around the world, maintains XOM as oil Leader Company and potential firm for generating futures earnings in short-term. Risk factors remains such as low oil levels, but we consider that those levels could change in the near term as summer season is approaching, middle-east stabilization is under control and oil demand should rise by 1.0 million barrels per day, according to International Energy Agency.

Works Cited
2011 Form 10-K Exxon Mobil Corporation. (n.d.). Retrieved April 17, 2015, from U.S. Securities and Exchange Commssion: http://www.sec.gov/cgi-bin/viewer?action=view&cik=34088&accession_number=0001193125-12-078102&xbrl_type=v#
2013 Form 10-K Exxon Mobil Corporation. (n.d.). Retrieved April 18, 2015, from U.S. Securities and Exchange Commission: http://www.sec.gov/Archives/edgar/data/34088/000003408814000012/xom10k2013.htm
2014 Form 10-K Exxon Mobil Corporation. (n.d.). Retrieved April 17, 2015, from Bloomberg Business: http://www.bloomberg.com/research/stocks/financials/drawFiling.asp?docKey=136-0000034088150000131CQ1JBGB8CAMGVEK9O2FC1JPD5&docFormat=HTM&formType=10-K
American Industry and Fracking: From Sunset to New Dawn. (16 Nov 2013). Retrieved April 19, 2015, from the Economist: http://www.economist.com/news/business/21589870-capitalists-not-just-greens-are-now-questioning-how-significant-benefits-shale-gas-and
BP. (n.d.). Retrieved April 19, 2015, from CNN Money: http://money.cnn.com/quote/forecast/forecast.html?symb=BP
CSFB. (n.d.). Retrieved April 19, 2015, from ETrade: https://www.etrade.wallst.com/v1/common/pdf.asp?docKey=453-CSFBW50_621027-1&User_SessionID=D32E25022F054036B2ED42E0229AB0C6&researchProvider=CSFB
Exxon Mobil Corp Data. (n.d.). Retrieved April 17, 2015, from Bloomberg Business: http://www.bloomberg.com/research/stocks/charts/charts.asp?ticker=XOM
Exxon Mobil Corporation Bonds. (n.d.). Retrieved April 18, 2015, from Morningstar: http://quicktake.morningstar.com/stocknet/bonds.aspx?symbol=xom
Exxon Mobil (n.d.). Retrieved April 19, 2015, from Wikipedia: https://en.wikipedia.org/wiki/ExxonMobil
Low Oil Prices Hurting U.S. Shale Operations. (21 Oct 2014). Retrieved April 19, 2015, from Oil Price: http://oilprice.com/Energy/Oil-Prices/Low-Oil-Prices-Hurting-U.S.-Shale-Operations.html
Our History. (n.d.). Retrieved April 18, 2015, from Exxon Mobil: http://corporate.exxonmobil.com/en/company/about-us/history/overview
Oil Price Forecast. (n.d.). Retrieved April 19, 2015, from Forbes: http://www.forbes.com/sites/billconerly/2014/12/18/oil-price-forecast-2015-2016/
REUTERS. (n.d.). Retrieved April 19, 2015, from ETRADE: https://www.etrade.wallst.com/v1/common/pdf.asp?docKey=1581-A2144-2QE2MPNQS1QTMA9DU3TJNJCFQG&User_SessionID=D32E25022F054036B2ED42E0229AB0C6&researchProvider=REUTERS
What Will it Take to Get Americans Buying Electric Cars? (24 Jan 2014). Retrieved April 19, 2015, from Fool: http://www.fool.com/investing/general/2014/01/24/what-will-it-take-to-get-americans-buying-electric.aspx
XOM Key Statistics. (n.d.). Retrieved April 17, 2015, from Yahoo! Finance: http://finance.yahoo.com/q/ks?s=XOM+Key+Statistics
XOM Stock Dividend Data. (n.d.). Retrieved April 18, 2015, from Dividend: http://www.dividend.com/dividend-stocks/basic-materials/major-integrated-oil-and-gas/xom-exxon-mobil/
XOM Annual Reports. (n.d.). Retrieved April 18, 2015, from Exxon Mobil: http://ir.exxonmobil.com/phoenix.zhtml?c=115024&p=irol-reportsAnnual
XOM Forecasts. (n.d.). Retrieved April 19, 2015, from CNN Money: http://money.cnn.com/quote/forecast/forecast.html?symb=XOM
XOM Earnings Forecast. (n.d.). Retrieved April 19, 2015, from NASDAQ: http://www.nasdaq.com/symbol/xom/earnings-forecast

Similar Documents

Free Essay

Stock Analysis of Exxon Mobil

...STOCK ANALYSIS REPORT - Exxon Mobil Corporation (XOM) –August 15th , 2011 [pic] Industry: Oil and Gas Operations Sector: Energy Recommendation: SELL Price: $74.29 (as of  August 15th 2011, 4:00pm ET) Intrinsic Value: $52.10 or 42.6% overvalued Fundamentals Grade: A Investment Style: Large Cap Blend CORPORATE INFORMATION [pic] Location: 5959 Las Colinas Boulevard Irving, TX 75039 Phone: 972-4441000 Fax: 972-4441348 Web Site: http://www.exxonmobil.com/ Employees: 83,000 Exchange: NYSE BUSINESS SUMMARY Exxon Mobil Corporation (Exxon Mobil) through its divisions and affiliates is engaged in exploration for, and production of, crude oil and natural gas, manufacture of petroleum products and transportation and sale of crude oil, natural gas and petroleum products. • ExxonMobil is the largest integrated oil company, with operations in over 200 countries. This globally diversified enterprise produces superior returns in its business segments when compared to other major oil and gas companies. • Exxon has a strong balance sheet with a cash position of approximately $13B and 0.07 Debt-to equity. Exxon has the liquidity and credit to invest in high return projects around the world. • Prices for oil and gas are expected to rise in the foreseeable future. Emerging market growth and increasing need for energy will place upward pressure on prices. Exxon will benefit as the world’s largest oil and gas company (by reserves, excluding national oil......

Words: 1803 - Pages: 8

Premium Essay

Financial Analysis of Conoco-Phillips

...………………………………………………………. 5 4.5 Common size Income Statement …………………………………………. 6 4.6 Benchmarking with Financial Ratios ………………………………………. 7 4.7 Business Segments ……………………………………………………………. 19 4.0 Issues ……………………………………………………………………………………. 22 5.0 Recommendations ………………………………………………………………… 23 6.0 Conclusion …………………………………………………………………………... 24 7.0 References …………………………………………………………………………... 25 Appendices Appendix 1 – Key Financial Data for COP, XOM and CVX Appendix II – Financial Ratios 1.0 Executive Summary ConocoPhillips has grown into the 3rd largest Integrated Oil and Gas Company in the US ever since the merger of Conoco and Phillips Petroleum in 2002. Since then, its market capitalization has grown 5 times to US$ 101 Bil with an asset base of US$155 Bil. This report provides an insight to the Board of Directors of the financial performance of ConocoPhillips since 2002 and will be benchmarked against competitors in the industry to give a cross sectional analysis. Whilst the growth of ConocoPhillips has been impressive over the last 10 years, earnings have not performed according to its peers in the industry. During this period, the Company had reported several impairments to its major assets and its earnings were eroded by the volatility of the crude oil and natural gas prices. These results have also unfolded some new challenges to Company in terms of financial gearing and the need to manage its cash for......

Words: 6098 - Pages: 25

Free Essay

New R Program

...Capital Management Bellevue, Washington Backgrounder Rotella Capital Management Quantitative Research Analyst Systematic CTA hedge fund trading 80+ global futures and foreign exchange markets Insightful Corporation Director of Financial Engineering Developers of S-PLUS®, S+FinMetrics®, and S+NuOPT® J.E. Moody, LLC Financial Engineer Futures Trading, Risk Management, Business Development OGI School of Engineering at Oregon Health & Science University Adjunct Instructor Statistical Computing & Financial Time Series Analysis Electro Scientific Industries, Inc Director of Engineering, Vision Products Division Machine Vision and Pattern Recognition Started Using R in 1999 R Tools for Portfolio Optimization 2 Introduction DJIA: 12/02/2008 - 04/15/2009 100 GM C 80 IBM annualized return (%) JPM 60 INTC HD DD GE PG BAC R-SIG-FINANCE QUESTION: stock price 90 40 MMM 20 KFT XOM PFE CVX JNJ VZ HPQ MCD KO UTX WMT T CAT MRK AXP BA Can I do < fill in the blank > portfolio optimization in R? MSFT DIS AA 0 IBM: 12/02/2008 - 04/15/2009 0 100 5 10 conditional value-at-risk (%) 15 20 95 80 85 Maximum Drawdown Jan Mar ANSWER: drawdown (%) IBM Underwater Graph 0 -5 P/L Distribution -10 -15 Yes! (98% confidence level) 0.12 0.14 Jan Mar 0.10 VaR 0.08 Density CVaR 0.06 0.00 -15 0.02 0.04 -10 -5 daily return 0 5 10 R Tools for......

Words: 663 - Pages: 3

Premium Essay

Exxon Mobil

...A Financial Ratio Quarterly Trend Analysis of: Exxon Mobil Corporation Stock Symbol: XOM Listed on New York Stock Exchange Prepared for: Dr. Edward Lawrence Department of Finance and Real Estate Florida International University In partial fulfillment of the requirements of Course: FIN 6406 By: Nicole Suarez Panther ID # 1101809 1.0 Introduction ExxonMobil Corporation and its affiliated companies operate in the United States and most other countries. Headquartered in Irvine, TX, ExxonMobil was formed following the merger of Mobil and Exxon. It is the world’s largest publicly traded international Oil and Gas Company. They hold an industry-leading inventory of global oil and gas resources. They are the world’s largest refiner and marketer of petroleum products, and their chemical company ranks among the world’s largest. They are also a technology company, applying science and innovation to find better, safer and cleaner ways to deliver the energy the world needs. The company has more than 82,000 employees across the world. ExxonMobil’s stock is publicly traded on the New York Stock Exchange (NYSE) under the symbol “XOM.” This report provides a quarterly trend analysis for ExxonMobil for fiscal year 2011. Financial information was obtained from the company’s website by examining the 10-Q SEC filings for Quarters 1 through 3 and the 10-K SEC filing for Quarter 4. Additional financial information was also found on Yahoo! Finance, MSN...

Words: 2496 - Pages: 10

Premium Essay

Exxon Mobil Analysis

...while equity overshadows at the 97%. Although the book and market weights differ substantially their WACC doesn’t vary much; the book value cost of capital being 3.8% and the market value being 4%.Should Exxon take on project A, with a NPV of over 182 million and an IRR of about 26%, we would agree to definitely accept. But , you really cant say that without doing sensitivity analysis. We choose to do the analysis on the cost of capital because that’s what I feel could fluctuate the most. Even at rates of 3% to 6%. The NPV didn’t move much which allows me to assume this is a pretty safe project for the company to take on. Rf page http://finance.yahoo.com/bonds/composite_bond_rates http://www.bloomberg.com/markets/rates-bonds/government-bonds/us/ http://www.dividendgrowthinvestor.com/2011/06/exxon-mobil-xom-dividend-stock-analysis.html http://finance.yahoo.com/bonds/composite_bond_rates , AAA corporate yeild , 10 year Treasury Yeild and Treasury Yeild , Exxon Beta http://finance.yahoo.com/q?s=%5EGSPC S & P 500 Yeild http://quicktake.morningstar.com/StockNet/bonds.aspx?Symbol=XOM&Country=USA bond shares outstanding and price !!!...

Words: 319 - Pages: 2

Free Essay

Exxon (First Draft Overview)

...training. Internal audits. Their internal auditors conduct comprehensive audits of one-third of their corporate operating units and business activities each year. Approximately 240 trained internal auditors have unrestricted access to facilities, business units, personnel and records and are empowered to investigate all potential noncompliance with the standards and anti-corruption laws. Reporting and investigating suspected violations They have a 24 hour hotline phone number and mailing address, to report suspected violations of company polices. A Hotline Steering Committee comprising security, audit, law and human resources personnel handles suspected violations and provides a report to the Audit Committee on a quarterly basis. ANALYSIS Exxon bases their success not just on the results obtained, but how they are obtained. Integrity plays a large role in good ethics. Employees are encouraged to reject/avoid any opportunity that could put the corporation in violation of the law. Results obtained from “ill-mannered” operations by employees are not tolerated by Exxon's code of ethics. Honesty plays another role in ethics; without honest evaluations of projects, honest book keeping and decision making the company will not succeed. Commitment to Social Responsibility The award in social Responsibility was presented for the NightWatch program, which developed by Malaria No More in collaboration with ExxonMobil and the Lalela Project. Through the program, Africa’s most......

Words: 5395 - Pages: 22

Premium Essay

Finding Your 401k Beta

...the stocks in this investment portfolio have been analyzed is January 1, 2004 through December 31, 2014. Each stock has had a beta test and corresponding regression analysis performed. A portfolio-wide beta test has also been completed to make further detailed conclusions. The beta of each stock will be compared to that of its standard. Any observations made from the betas will also be reported. The below table represents the stock breakdown of the 401(k) investment portfolio. The portfolio consists of twelve stocks, representing seven of the major industry categories. Six of the twelve stocks come from the consumer goods industry, with half being cyclical and the other half being non-cyclical. The remaining industry categories included in this portfolio are two from industrials and one of each from the following categories: energy, telecommunications, technology, and healthcare. A further analysis shows that 60% of the portfolio is made up of consumer goods, while the remaining percents are as follows: 15% energy, 10% industrials, 5% telecommunications, 5% technology, and 5% healthcare. The below table represents the portfolio beta and the beta for the individual stocks within the portfolio. The total beta represents the portfolio beta amount for each stock as of the weighted percentage. The below beta analysis for this portfolio indicates that it is less volatile than the market over this historical period. Only two of the of the stocks in this portofilio were more......

Words: 650 - Pages: 3

Premium Essay

Financial Analysis Exericse

...FINANCIAL ANALYSIS EXERCISE 1 The purpose of this exercise is to analyze four companies financial statement by using ratios to show how stable and well the company performance with the constant changes in the economy. With the collected data, the following questions answered: • How would you rank the four firms in terms of financial performance? • Why might their financial performances differ? • What economic or market factors might account for big differences in P/E ratios? Analyzing the financial performance ratio of the total debt/equity, ROA and the ROE will give the information need to rank the companies from the best to the least. According to the data from the debt-to-equity ratio, a company that have a low ratio will have less debt and more equity. From that information, the companies will ranked as Exxon (1.01), Merck (1.52), Target (1.91) and Verizon (5.79). If the return on assets (ROA) ratio is used Exxon (13%), Target and Merck tied at 6% and Verizon (0%). ROA ratio shows a positive sign of a company performance. Finally, using the return of equity (ROE), the company would ranked as Target (23%), Merck (15%), Exxon (12%) and Verizon (-25%). ROE shows how well the company is doing according to the stockholders investments. Why might the company’s performance difference is a question with a simple answer. None of the companies is in the same field: petroleum, medical supplier, phone carrier, and clothes/food store. The four companies do not......

Words: 763 - Pages: 4

Premium Essay

Part 1 Caltex Australia Limited 4.Docx

...Australia Ltd: BUSINESS VALUATION GROUP PROJECT Table of Contents Executive Summary 3 1. Introduction 4 1.1 Purpose 4 1.2 Scope 4 1.3 Sources 4 2. Company Background 4 3. Benchmark 5 4. Capital Market Analysis 6 4.1 Share Ownership 6 4.2 Share Trading and Liquidity 9 4.2.1 Stock Liquidity 9 4.2.2 Bid-Ask Spread 10 4.3 52 Weeks High and Low 12 4.4 News and Disclosure Analysis 14 4.5 Analyst Coverage 17 5. Business Analysis 26 5.1 Macroeconomic Analysis 26 5.1.1 Economic Factors 26 5.1.1.1 GDP Growth 26 5.1.1.2 Exchange Rate 27 5.1.1.3 Interest Rate 28 5.1.2 Legal Factors 28 5.1.2 Market Factors 29 5.2 Industry Analysis 29 5.2.1 Rivalry Among Existing Companies 29 5.2.2 Threat of Substitutes or Services 30 5.2.2.1 Shale Gas 31 5.2.2.2 Biofuels and Renewable Resource 31 5.2.3 Threat of New Entrants 31 5.2.4 Bargaining Power of Buyers 32 5.2.5 Bargaining Power of Suppliers 33 5.3 Business Strategy Analysis 33 5.3.1 Cooperating With Woolworth 33 5.3.2 Domestic Market 34 5.3.3 Packaging Changing Plan 34 6. Management Quality and Corporate Governance Analysis 35 6.1 Management Quality 35 6.2 Internal Corporate Governance 37 6.3 External Governance 40 7.Earnings Quality Analysis 41 7.1 Earning Persistence (EP) 41 7.2 Discretionary Accrual (DA) 43 Reference List: 45 Executive Summary This business valuation report examines the intrinsic share price of Caltex Australia Limited,......

Words: 8004 - Pages: 33

Premium Essay

Analyzing a Business Environment

...Business Analysis 11 By Gloria Rodriguez MTG/521 December 5, 2011 Analyzing a business environment like Chevron’s is important, so that investors can determine if Chevron is a company one can invest in. Researching a company’s business environment is helpful to further secure business decisions. Careful consideration must be taken, and a closer review of historical financial statements is suggested to determine the company’s financial health. One way to determine a company’s health is by reviewing a company’s business environment, analyzing a company’s income statement, balance sheet, and statement of cash flows. Chevron is known to be one of the top profitable Fortune 500 Company. A recent SWOT analysis was completed determining Chevron as good company to invest in. Although, Chevrons SWOT was determined successful the mutual fund manager has to determine if the company is also successful in his or her their finances. There are five areas in a company’s business environment. The five areas of a business environment are economic, technical, competitive, social, and global business. Nickels, McHugh, and McHugh (2010) “Business environment consists of the surrounding factors that either help or hinder the development of businesses.” Businesses surrounded by a stable business environment can function successfully. Businesses that focus on their business environment closely can to make changes accordingly. Nickels, McHugh, and McHugh (2010) “Businesses normally can’t......

Words: 1956 - Pages: 8

Premium Essay

Statistical Learning and Data Mining

...The datasets are chosen from the website of the book “Statistics and Data Analysis for Financial Engineering” by David Ruppert. The book is mentioned as one of the references for this course. The two data sets chosen are 1. Stock_FX_Bond.csv 2. Stock_FX_Bond_2004_to_2006.csv The data includes the volumes and adjusted closing prices for GM, F, UTX, CAT, MRK, PFE, MSFT, IBM, C and XOM. The data also contains the volumes and adjusted closing prices for the S&P 500 index. The data set also includes treasury rates for different maturities and rates on corporate bonds as well as foreign exchange rates for the period of 1987 to 2006. Objectives: 1. Optimal portfolios for various levels of Risk. Conventional investors look to attain maximum alpha values (rates of return) at levels of risk they are comfortable with. We can hence at any level of risk, define portfolios that generate maximal returns. In this project, we aim to identify the composition of portfolios that achieves this desired objective. Existing models such as CAPM, along with additional forms of regression will be used to compare with additional methods, not covered in the duration of the class to identify the better methods of portfolio creation. We will use learning tools and models to predict the rates of return and risk for each stock that will allow us to build portfolios to suit needs. We will carry out uncertainty analysis using resampling techniques and attempt to use Bayesian methods as......

Words: 471 - Pages: 2

Premium Essay

Shell Analysis

...Standard & Poor’s AA+ rating and Moody’s AAA rating. Shell is the No.1 of the 2013 World Top 500. Shell has over 16 research institutions in the world, and has advanced production technology on natural gas, refined petroleum, and chemical products. Strong brand influence Deep-water oil and gas development in world record Capabilities: Shell has most advanced technology of exploration. Shell is the international leader in the development of renewable energy technologies. Shell has the advanced petrochemical Technology. Shell has the most safety management system for exploitation. Core competencies: The most advanced technology of exploration is the core competencies to shell. 5. Financial analysis I pick up balance sheet and income statement to analysis the company’s operation situation. | | | | CONSOLIDATED BALANCE SHEET (AT DECEMBER 31) |   | 2012 | 2011 | 2010 | Assets | | | | Non-current assets | | | | Intangible assets | 4,470 | 4,521 | 5,039 | Property, plant and equipment | 172,293 | 152,081 | 142,705 | Upstream | 138,222 | 119,789 | 109,677 | Downstream | 33,259 | 31,467 | 32,205 | Corporate | 812 | 825 | 823 | Equity-accounted investments | 38,350 | 37,990 | 33,414 | Investments in securities | 4,867 | 5,492 | 3,809 | Deferred tax | 4,045 | 4,732 | 5,361 | Retirement benefits | 12,575 | 11,408 | 10,368 | Trade and other receivables | 8,991 | 9,256 | 8,970 | | 245,591 | 225,480 | 209,666 | Current......

Words: 1841 - Pages: 8

Premium Essay

Exon Mobile

...however very few substitutes are commercially feasible coal, nuclear energy, renewables like hydroelectric power solar power and wind power pressure from this substitutes is however very low for now. (Investopedia, 2014) Bargaining Power of Buyers OECD countries present major bargaining power by buyers the balance of power is shifting more towards buyers who are increasingly seeking lower prices and better contract terms. . (Investopedia, 2014) The bargaining power of Suppliers. Much of the oil and gas business is dominated by a small handful of powerful companies Bid suppliers have significant power over small supplier this is huge capital investments required tends to weed out inefficient suppliers. (Investopedia, 2014) Firm Analysis Assessing Exxon’s topline verses bottom line growth As of 03/24/2014 At the first glance, over the past five years Exxon revenues have been increasing, the cost of revenue has been fluctuating. The cash flow from operations has been positive. Which is a good sign that the company is in good health. Data gathered from Morningstar indicates that Exxon revenue increase using a moving average of three years increased from 2013 to 2013 by 4.57%. However the latest quarter on a one ear moving average Exxon has had a negative growth of 3.74. This should not shock investors the as long as the pattern does no keep repeating itself over a long period of time Operating Income increased from 2012 to 2013 by 4.57 on......

Words: 6343 - Pages: 26

Free Essay

Exxon Mobil

...Irving, Texas. On November 30, 1999, Exxon and Mobil merged to become ExxonMobil. ExxonMobil is the largest publicly traded petroleum and petrochemical enterprise in the world (www.exxonmobil.com). The main activities of ExxonMobil are exploration, production, transportation and sale of crude oil and natural gas as well as the manufacture, transportation and sale of petroleum products (www.corporatewatch.org). This analysis will discuss the history of ExxonMobil. The analysis will identify the market structure and production decisions of the company. It will attempt to determine consumer demand. Through the findings of consumer demand the analysis will also attempt to determine the behavior and pricing strategies of ExxonMobil. It will also provide an explanation of management decisions. And, an explanation of management approaches to opportunities along with threats from macroeconomic expectations and implications. The analysis will also identify ExxonMobil’s competitors. Some common examples of competition are; Royal Dutch Shell, BP, and Chevron. The analysis will further discuss how the decisions of each individual company may affect similar companies in the industry.   HISTORY ExxonMobil is the biggest and most profitable of the Western “supermajor” oil companies (ExxonMobil: Oozing Success). In 1999, when Exxon and Mobil merged to form Exxon Mobil Corporation, it brought together a shared history of over 120 years with being a part of the Standard Oil......

Words: 2985 - Pages: 12

Premium Essay

Portfolio Management

...2010. This report covers the period from September 12, 2010 until November 8, 2010. Throughout this report we refer to this period as the “investment period”. Investment Objective The Fund is allocated so that it may accomplish three objectives: growth of capital and the conservation both principal and current income. Investment Strategies The Fund invests primarily in common stocks. Selection of the Fund’s assets was based on a top-down investment approach. Based on our macro analysis, we decided to invest approximately 75% of the fund in equity securities issued by companies domiciled in North America and 25% of the fund in equity securities issued by companies domiciled outside of North America. Next we determined the sectors in which the Fund was to be invested. We used Value Line Investment Survey to assist in identifying attractive industry sectors. Our Value Line industry analysis produced two appealing sectors, Railroads and Semiconductors. Our second analysis, based on our investment objective to track the S&P 500, found that our portfolio should be diversified within several industries, which include Food Processing, Retail, Oil and Gas, Industry Information Providers, and Consumer Goods. Section 2. Company Profiles Novellus Systems, Inc. Novellus Systems, Inc. (NVLS-NASDAQ) develops, manufactures, and sells equipment that is used in the fabrication of integrated circuits (semiconductors). The company was established in 1984 and is......

Words: 4456 - Pages: 18