Is Exxon Mobil’s Stock Attractive After Superior Graphite Deal and Electric Vehicle Expansion?

Thinking about what to do with Exxon Mobil stock right now? You are definitely not alone. Investors are trying to make sense of recent price swings and shifting headlines to decide if this energy giant deserves a spot in their portfolios. Over the past three years, Exxon’s stock has put up a massive gain of nearly 49%. If you zoom out to five years, the return jumps to an eye-popping 341.5%. That said, the pace has moderated lately, with a 4.9% gain in the past year and single-digit moves in the last week and month as the market digests new developments.

Some of those moves have been sparked by news that could impact Exxon’s long-term trajectory. For instance, the company recently announced its intention to buy Superior Graphite’s assets, signaling a determined push into the fast-growing electric vehicle supply chain. Meanwhile, the global oil picture has shifted with OPEC+ signaling a production increase, stoking new questions about future pricing power for industry players like Exxon. Even as headlines keep rolling in, much of the discussion comes down to valuation: whether the stock’s recent run and future potential are properly reflected in today’s price of $117.22.

According to a quick scan of six major valuation checks, Exxon scores a 4, signaling the company is undervalued in four out of six classic measures. But while simple scores are useful, there is more nuance to uncover. Next, let’s dig into the key methods analysts use to weigh Exxon’s intrinsic value. Stay tuned, because afterwards we will consider an even smarter lens for evaluating whether Exxon Mobil is worth your investment dollars.

Why Exxon Mobil is lagging behind its peers

Approach 1: Exxon Mobil Discounted Cash Flow (DCF) Analysis

A Discounted Cash Flow (DCF) valuation aims to estimate a company’s true worth by projecting its future cash flows and then discounting them back to today’s dollars. This helps investors gauge if a stock’s current price accurately reflects its long-term earning power.

For Exxon Mobil, the latest DCF model uses a 2 Stage Free Cash Flow to Equity approach. Currently, Exxon generates free cash flow of $32.4 billion. Analyst estimates cover the next five years, with projected free cash flow expected to rise to roughly $44.9 billion by 2029. Beyond this, projections up to ten years are extrapolated, showing continued growth, though with more uncertainty as estimates stretch further into the future. All amounts are based in U.S. dollars.

Based on these cash flow projections, the DCF model calculates an intrinsic value of $251.80 per share. With Exxon’s current share price at $117.22, the model implies the stock is trading at a 53.4% discount to its estimated intrinsic value.

Result: UNDERVALUED

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Exxon Mobil.

Our Discounted Cash Flow (DCF) analysis suggests Exxon Mobil is undervalued by 53.4%. Track this in your watchlist or portfolio, or discover more undervalued stocks.

Approach 2: Exxon Mobil Price vs Earnings

The price-to-earnings (PE) ratio is a favored metric for valuing well-established, profitable businesses like Exxon Mobil. Since it connects a company’s stock price to how much it earns per share, the PE ratio quickly shows how much investors are willing to pay for every dollar of profit today. Companies expected to grow faster or perceived as less risky typically warrant higher PE ratios because investors anticipate those future earnings will continue to increase.

Exxon Mobil currently trades at a PE ratio of 16.1x. This sits above the oil and gas industry average of 13.5x, but well below the major peer group average of 24.1x. Looking deeper, Simply Wall St's proprietary “Fair Ratio” for Exxon is 20.6x, calculated using Exxon’s own earnings growth prospects, profit margins, industry dynamics, market capitalization, and risk profile. Unlike a simple comparison to industry or peer averages, the Fair Ratio reflects Exxon's unique strengths and risks and offers a more tailored view of what its multiple should be today.

Comparing Exxon’s actual PE of 16.1x to its Fair Ratio of 20.6x suggests the stock is trading at a discount, with meaningful upside if the market comes to recognize the company’s intrinsic value.

Result: UNDERVALUED

PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your Exxon Mobil Narrative

Earlier we mentioned that there is an even better way to understand valuation, so let's introduce you to Narratives. A Narrative is simply the story and reasoning behind an investor’s view on a company, tying together their personal outlook on factors like future revenue, earnings, and profit margins to build a unique fair value estimate. It goes beyond just the numbers, connecting your perspective on where Exxon Mobil is heading to a forecast and an actionable fair value, so you can see if the stock price genuinely matches your thesis.

Narratives are designed to be accessible to all investors and are already helping millions on Simply Wall St. Just visit the Community page to see their power for yourself. When you create and track a Narrative, you can see at a glance if your fair value is above or below the current price, making buy and sell decisions much clearer and more personalized. Best of all, Narratives update dynamically when new information, like earnings releases or significant news, hits the market, ensuring your view stays relevant.

For example, two users looking at Exxon Mobil today might have very different perspectives: one may see a fair value of $132 based on optimism about the energy transition and operational strength, while another sees $174 on rapid Guyana growth projections. Both are using Narratives to guide smarter decisions in real time.

Do you think there's more to the story for Exxon Mobil? Create your own Narrative to let the Community know!

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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