Exxon Mobil (XOM) Spouts Value

Exxon Mobil Corp. (NYSE: XOM) shares are among the worst performers this year on the Dow Jones Industrial Average and yet the company may be one of the most undervalued companies on the exchange, a Barron’s article reported today. The company has had a (10%) YTD change, 12.4 P/E ratio (highest in the sector), and the lowest dividend yield (2.3%).

Exxon can boast net cash of $2.9 billion and one of a few companies in the world with a triple-A credit rating. The company has also had a yearly return of about 15%, which includes reinvested dividends. Other companies that have had similar or greater returns include Wal-Mart (NYSE: WMT), Berkshire Hathaway (NYSE: BRK-A), and Altria (NYSE: MO).

XOM also had a ROI of 34% last year. As a comparison, Chevron (NYSE: CVX) had a ROI of 36%, BP (NYSE: BP) had 21%, and Royal Dutch (NYSE: RDS-B) had about 17%. Exxon has also replaced more than 100% of its production in each of the past 15 years.

Exxon tends to have a relatively conservative view on capital project spending. This year it plans to spend $26 billion on projects. The company doesn’t spend more during the good times, nor does it spend less in the thinner times. The company is more like Warren Buffett when it comes to spending; they’re in it for the long-run, not for short-term gains.

Exxon Mobil has favored share repurchase programs over dividend for the past five years. The company has spent about $132 billion on buybacks versus $36 billion in dividends, and has repurchased $17 billion YTD.

Exxon’s profits have dropped year-over-year, however, from $2.58 in 2008 to $0.98 this last quarter. Net-cash is down from $26.4 billion as well after buybacks this year.

Exxon has estimated energy reserves of about 72 billion barrels of oil. This number includes oil and gas deposits that don’t meet the definition of proved reserves.

The Street expects to see a FY09 EPS of $3.93, and total revenues of $270.51 billion. Last quarter, as was previously stated, Exxon posted an adjusted EPS of $0.98. YTD EPS is $2.74, but the past three quarters have seen XOM posting EPS below the Street consensus.