This article first appeared on GuruFocus.
ExxonMobil (NYSE:XOM) is generating cash, but investors are marking shares lower. The integrated energy producer traded at $171.38, down 3.43%, at 10:05 a.m. ET on November 4. ExxonMobil reported $19.1 billion in third-quarter free cash flow on October 30, giving investors a substantial cash cushion to weigh against uncertainty over energy prices. The key question: how much of that strength can the business sustain?
Quarterly GAAP earnings reached $15.4 billion, while operating cash flow totaled $25.7 billion. Shareholders received $9.4 billion, split between $4.3 billion in dividends and $5.1 billion in repurchases. Management also reported an almost $11 billion reduction in net debt since year-end. Free cash flow covered those distributions roughly 2.03 times, leaving about $9.7 billion after payouts. That surplus could give ExxonMobil room to strengthen its balance sheet while continuing to reward shareholders, although future cash generation will depend on operating performance and industry conditions.
The GuruFocus snapshot adds some perspective: a GF Score of 70 out of 100, with financial strength standing above growth and momentum on the radar chart. A price-to-earnings ratio of 17.61 also means investors are paying a meaningful multiple for earnings that can fluctuate with the energy cycle. Strong quarterly cash flow helps support the investment case, but its durability matters more than one period’s surplus. Watch whether cash remaining after capital spending continues to cover dividends and repurchases as energy prices and refining margins change.
Source: finance.yahoo.com — article syndicated from the publisher’s feed; all rights remain with the original publisher.
