Travis Diekmann

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Group 5

• Travis Diekmann
• Christina Adame
• Brian Jones
• Julie Sechelski
• Huyen To
• Claudia Moronez
• Summer I 2005

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ExxonMobils Guiding Principles
Exxon Mobil Corporation is committed to being the
world's premier petroleum and petrochemical
company. To that end, we must continuously
achieve superior financial and operating results
while adhering to the highest standards of
business conduct. These unwavering expectations
provide the foundation for our commitments to
those with whom we interact
Shareholders Customers Employees Communities
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An Oil Powerhouse In The Making

• Initially part of Rockefellers Standard Oil
  Trust
  
• Supreme Court uses Anti-Trust Litigation to spilt
  Standard Oil Trust into 34 companies Socony
  Jersey Standard were 2 of these 34.
  
• Socony becomes Mobil Oil in 1966
• Jersey Standard becomes Exxon in 1972
• Merger talks begin in 1998

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November 30, 1999ExxonMobil is created
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Put a Tiger in Your Tank

• The tiger is a symbol of Exxon brand strength and
  pride known all over the world.
  
• The tiger was spotted in England in the
  mid-1930s, when it made its Esso advertising
  debut as a ferocious, illustrated beast. This
  tiger was stopped in its tracks by World War II,
  when gasoline rationing and industry gasoline
  pools brought a halt to brand advertising. The
  Exxon brand tiger returned in 1953 when
  competitive gasoline marketing resumed.

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Mobils Symbol

• Since ancient times, Pegasus has been a symbol of
  power and speed as well as imagination.
  
• At first, the flying red horse was only used for
  automotive products but it soon became the
  company's main symbol
  
• The flying red horse appears on Mobil packaging
  around the world, symbolizing the power and speed
  made possible through the use of Mobil products.

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Board of Directors
Lee R. Raymond Chairman of the Board
William R. Howell
James R. Houghton
Reatha Clark King
Rex W. Tillerson President
Philip E. Lippincott
Henry A. Mckinnell
Marilyn Nelson
Michael J. Boskin
Walter V. Shipley
William W. George
The role of the board is to manage the business
and affairs of ExxonMobil in accordance with New
Jersey law.
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Salaries In 2003
Lee R. Raymond 27,783,140 Chairman of the Boa
rd Rex W. Tillerson 5,701,515 President  

If L. R. Raymond cashed out on
June 6, 2005, he would receive
177,879,110.40
If R. W. Tillerson cashed out on
June 6, 2005, he would receive
23,907,744.00
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Makeup of the Board

• The board holds 11-13 members comprised of 2-3
  employee directors and 9-10 non employee
  directors.
  
• Chief Executive Officer also serves as the
  Chairman of the Board.
  
• Elections are held annually at the meeting of the
  shareholders.

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5 Insider Ownership
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5 Insider Ownership

• MAJOR DIRECT HOLDERS (FORMS 3 4)
• Holder Shares
  Reported
  
• RAYMOND, LEE R. 3,088,179
  25-Feb-05
  
• LONGWELL, HARRY J. 964,008
  10-Dec-04
  
• MCGILL, STUART R. 518,491
  22-Feb-05
  
• TILLERSON, REX W. 415,065
  22-Feb-05
  
• SIMON, J. STEPHEN 406,511
  10-May-05

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Integrated Oil and Gas
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Competitors
Exxon Mobile is number one in market
capitalization holding 39 of the market. The
closest competitor is BP p.l.c. with 23,
followed by Chevron Texaco with 12.
ExxonMobil also leads the industry in sales with
40. Its biggest competitors are ChevronTexaco
with 21, and ConocoPhillips with 18.
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Market Capitalization
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Industry Sales
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Financial RatiosGrowth Ratios
Rating Weak
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Financial RatiosPrice Ratios
Rating Good
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Financial RatiosProfit Margins
Rating Good
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Financial RatiosFinancial Condition
Rating Good
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Financial RatiosInvestment Returns
Rating Good
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Financial RatiosManagement Efficiency
Rating Very Good
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Financial RatiosSummary
Rating Good
In our analysis of the financial ratios for
ExxonMobil, we have determined that although the
company is weak in its growth ratios, the company
is overall performing good.
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Earnings Estimates
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XOM Stock

• Stock Price
• June 6, 2005 57.60
• Currently 58.69
• Shares Outstanding
• 6.366 Billion
• Market Capitalization
• 364.9 Billion

• Holding Period Return
• 0.3155 2005(expected)
• FCFE
• 18.401 mil. 2005(expected)

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Holding Period Returns
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Free Cash Flow Cost of Equity
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Cost of Equity (Discounted Cash Flow Model)
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.ke (Constant Dividend Growth Model)
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Risk Analysis Beta
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Risk Analysis CAPM
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Cost of Capital
The cost of capital of the firm has remained
fairly constant throughout the past three years.
The weighted average cost of has increased
steadily, but still remains in the five percent
range. The firm has managed to maintain
stability in its capital structure. In 2005,
their cost of capital may reach six percent.
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Debt/Equity Ratios
2005

• Due to the fact that we are currently in the 2005
  Fiscal Year, the numbers for the Debt/Equity
  Ratios reflect 2004 numbers. Exxon Mobil has
  about 5 debt and 95 equity as opposed to the
  industry which has 13 debt and 87 equity. So
  compared to the rest of the oil and gas industry
  Exxon Mobil has GOOD debt/equity ratios

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MM Proposition
Model 2-With Tax
Exxons cost of capital and weight of debt
reflect MMs Model 2. However, if we were to
analyze more then three years, the graph would
reflect Model 3. With this model we can find o
ptimal capital structures for the firm. If we
were to analyze the data for a longer time period
we would be able to graph the firms optimal
capital structures, which would result in the
firms optimal value as well.
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Market EfficiencyCompany Specific News
01/31/2005
Good News ExxonMobil announces Quarterly Profit
of 8.42 Billion
Market Efficiency Weak Form
Why? Before the news broke, prices were already
climbing. The news did not help the price of th
e stock rise higher.
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Market EfficiencyNon-Company Specific News
09/15/2004
BAD NEWS Hurricane Ivan forces ExxonMobil and co
mpetitors to halt production in Gulf of Mexico.
Market Efficiency No Form
Why? Before and after the news, there was a
normal variation in price. This variation remai
ned even after the news broke.
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Strengths

Ke in DCF is .129
Ke in CAPM is .0253
The stock is currently under priced
Beta of 0.47 combined with projected stock price
increase equals
profit with low risk.

ExxonMobil has 40 of the Industry Sales, 39
Industry Capitalization
Debt/Equity Ratio is approximately .05
Net Profit Margin for 1 5 yrs. Is above
industry and SP 500
Investment Returns (ROA, ROE, ROC) are all above
industry and SP 500 companies
14 out of 18 analysts recommend Buy or Strong Buy
Strong corporate history, strong corporate
culture Worldwide demand for oil not likely to de
crease anytime soon
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5 Year Stock Price
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Weaknesses
A significant weakness is that the stock price
has continued to rise. There is a risk that the
stock price will eventually plateau.
OPECPrice Instability
OPEC Increases Production, Oil Price Falls, Lower
Revenues OPEC Decreases Production, Oil Prices Ri
se, Lower Demand
Fear of a energy bubble
A conservative company that will continue to
increase dividend growth at a constant rate
despite record earnings.
Weak Growth Rates
Negative Dividends (5 year annual average)
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Analyst Recommendation
(Strong Buy) 1.0 - 5.0 (Strong Sell)
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Conclusion
Strong Management
Strong History
Strong Buy
Exxon Mobil might not offer the excitement or
share-price volatility of smaller oil companies,
but what it does offer investors are rock-solid
financials, a proven, conservative management
team dedicated to enhancing shareholder value,
relatively consistent earnings growth and steady
dividend increases