Once the darling of the Oil & Gas industry, ExxonMobil (XOM), has now lost its sheen. Gone are those days when the company watched its earnings grow, cheered the investors up with dividend raise and buy-back stock. Today, the company is falling behind its peers and competitors. Will Exxon be the General Electric (GE) of the O&G Industry, or will its management help reverse the downward tumble?
The company began faltering since the start of the oil crash in 2014. Exxon has many issues to tackle, right from lower cash flow to dividend cuts to its restructuring — much similar to GE.
In past year, Exxon stock fell 9%. Year-to-date, shares slipped 11%. Such performance represents a bleak future for the company, forcing investors to dump the stock.
Another problem plaguing the company is the rise in capital expenditure. Despite earnings growth, the company struggles to return the value to its shareholders — given the major spends in new explorations.
As a result, Exxon has taken on a greater of amount debt — with total net debt growing to a mammoth $43.6 billion.
To increase profits, the company recently decided to bring a significant change in its refining operations — to bring together it’s refining and marketing unit from its downstream business. This is said to be the first major change introduced during Darren Woods’s period as CEO.
While these moves would take its time to reflect on the performance, it is to be noted that Exxon failed miserably even in its latest quarterly earnings. The explorer missed the estimation of $74.31 billion, reporting just $66.5 billion in sales.
Despite all this, it is less likely that Exxon would end up being similar to GE. The company is making considerable investments to stir up the current situation to pump up its earnings as well as cash flow. Over the next five years, the oil and gas giant looks to spend $50 billion to expand its business in the U.S. With such new strategies in place, we might just see this stalwart turn itself around for the better.
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