• If you are wondering whether Exxon Mobil stock still offers value at today’s levels, this article walks through what the current price might be implying and how that stacks up against a range of valuation checks.
• The stock last closed at US$137.55, with returns showing a slight decline of 0.2% over the past week and a larger fall of 8.2% over the past month, while still sitting on gains of 12.1% year to date and 29.0% over the past year.
• Recent Exxon Mobil headlines have focused on its role within the broader energy sector, including ongoing attention on large integrated producers as investors reassess long term energy demand and supply. This backdrop has helped frame how the market is currently pricing the stock and may help explain some of the recent share price movements.
• Exxon Mobil holds a valuation score of 5/6, and the next sections break down what that means across different valuation approaches, before finishing with a broader way to think about value that goes beyond any single model.

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

A Discounted Cash Flow, or DCF, model estimates what Exxon Mobil could be worth today by projecting future cash flows and discounting them back to a present value. It is essentially asking what future cash the company might generate, expressed in today’s dollars.

For Exxon Mobil, the model used here is a 2 Stage Free Cash Flow to Equity approach. The latest twelve month free cash flow is about $23.0b. Analyst projections and subsequent extrapolations point to free cash flow of $47.0b in 2030, with intermediate projections between 2026 and 2035 ranging from about $42.3b to $55.3b before discounting. All cash flows are treated in $ and then discounted to account for the time value of money and risk.

Aggregating these discounted cash flows produces an estimated intrinsic value of $274.15 per share. Compared with the recent share price of $137.55, the DCF implies Exxon Mobil stock trades at a 49.8% discount to this estimate. This suggests the shares may be undervalued on this model.

Result: UNDERVALUED

Our Discounted Cash Flow (DCF) analysis suggests Exxon Mobil is undervalued by 49.8%. Track this in your watchlist or portfolio, or discover 43 more high quality undervalued stocks.

Approach 2: Exxon Mobil Price vs Earnings

For a profitable company like Exxon Mobil, the P/E ratio is a useful yardstick because it links what you pay for the stock to the earnings the business is currently generating. In general, higher growth expectations and lower perceived risk can support a higher P/E multiple, while slower growth and higher risk tend to be associated with lower P/E levels.

Exxon Mobil currently trades on a P/E of 22.52x. This sits above the Oil and Gas industry average P/E of 12.90x, yet below the peer group average of 37.98x. To move beyond simple comparisons, Simply Wall St uses a proprietary “Fair Ratio”, which estimates what a more tailored P/E might look like once factors such as earnings growth, industry characteristics, profit margins, company size and risk profile are taken into account.

For Exxon Mobil, this Fair Ratio is 30.02x, which is higher than the current 22.52x. On this framework, the stock screens as trading below the P/E level implied by those company specific factors, which indicates that Exxon Mobil appears undervalued on this metric.

Result: UNDERVALUED

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Upgrade Your Decision Making: Choose your Exxon Mobil Narrative

Earlier it was mentioned that there is an even better way to understand valuation. This is where Narratives come in. They allow you to attach a clear story about Exxon Mobil to the numbers you see by tying your view on its future revenue, earnings, margins and fair value into a single, easy to follow forecast. The Simply Wall St platform hosts this on the Community page, updates it automatically when new news or earnings arrive, and uses it to compare each Narrative fair value to today’s share price so you can judge for yourself whether the stock looks expensive or inexpensive right now.

In practice, that means one Exxon Mobil investor might build a Narrative that lines up with a fair value around US$132 per share, based on a certain revenue growth and margin outlook. Another might frame a higher growth, higher margin Narrative that points to a fair value near US$195. The tool simply sets those side by side so you can see how different stories about the same company translate into different numbers and different potential decisions.

For Exxon Mobil however we will make it really easy for you with previews of two leading Exxon Mobil Narratives:

Fair value: US$174.00 per share

Implied discount to fair value vs last close (US$137.55): about 21.0%

Revenue growth assumption: 12.97%

• The author focuses heavily on Exxon Mobil's 45% stake in the Stabroek Block in Guyana, highlighting low production costs, high margins and a material contribution to group earnings over time.
• The Narrative sets out detailed production, cost and inflation assumptions to build a 5 year projection, arriving at a base case fair value of US$174 with additional bull and bear cases.
• It also flags risks around oil prices, inflation, regulation in Guyana, the energy transition and project execution, while still presenting Exxon Mobil as a core long term holding under those assumptions.

Fair value: US$132.00 per share

Implied premium to fair value vs last close (US$137.55): about 4.2%

Revenue growth assumption: 6.5%

• This Narrative sets a fair value of US$132 per share from a DCF model, arguing that the market does not fully reflect Exxon Mobil's cash flow durability, Permian and Guyana assets and Low Carbon Solutions business.
• Key points include the role of the Pioneer acquisition, large scale dividends and buybacks, and a focus on carbon capture and low carbon hydrogen as a potential future earnings stream.
• It also underlines risks such as commodity price swings, ESG and reputational issues and the possibility that a faster energy transition could leave some assets underused.

If you want to see how other investors are framing Exxon Mobil's potential, you can review these and the rest of the Community Narratives in full to judge which assumptions line up best with your own view of the stock.

Do you think there's more to the story for Exxon Mobil? Head over to our Community to see what others are saying!

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.