The closure of the Strait of Hormuz and the resulting oil supply shock have pushed Exxon Mobil (XOM) into sharper focus for investors, as the stock trades near US$165 with strong recent returns.

The recent 1-day share price return of 1.33% and 7-day share price return of 4.60% add to a strong 30-day move of 10.83%. The 1-year total shareholder return of 45.15% and 5-year total shareholder return of 249.11% point to momentum that has built steadily around Exxon Mobil as investors weigh higher oil prices, bond issuance and portfolio reshaping such as a potential New Zealand exit.

If rising energy prices have you rethinking your portfolio, it could be a good moment to look beyond the majors and size up 88 nuclear energy infrastructure stocks

With Exxon Mobil now near US$165 and trading above the average analyst price target, yet showing an estimated 33% intrinsic discount, you have to ask: is this still mispriced value, or is the market already baking in future growth?

Most Popular Narrative: 30.9% Overvalued

According to Richard_Bowman, the narrative fair value of $126.39 sits well below the recent $165.43 share price, which frames Exxon Mobil as richly priced against its own cash flow story.

With improved cash flows, and low debt, I assume Exxon will continue to repurchase shares. I’m estimating an 8% decline in shares outstanding by 2028. Repurchases may well be higher, but I’m making some allowance for acquisitions and investment in renewable energy assets.

Want to see what kind of revenue path, margin profile, and earnings multiple it takes to justify that gap between $126 and $165? The narrative lays out a detailed roadmap built around steady output, higher value barrels, and a premium P/E that might surprise you.

Result: Fair Value of $126.39 (OVERVALUED)

However, that cash flow story can change quickly if oil prices weaken, or if heavier spending on renewables and acquisitions squeezes margins more than this narrative assumes.

Another View: Cash Flows Point To Undervaluation

Richard_Bowman’s narrative presents Exxon Mobil as 30.9% overvalued at $165.43 versus a fair value of $126.39, while our DCF model indicates something very different. On that cash flow view, XOM at $165.43 trades at a 33.5% discount to an estimated value of $248.93, placing it in undervalued territory. Which perspective aligns better with the risks you consider most important?

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Exxon Mobil for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover 61 high quality undervalued stocks. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Next Steps

The split in sentiment around Exxon Mobil is clear. This is a moment to move quickly, test the numbers yourself, and weigh both sides of the story with 3 key rewards and 1 important warning sign

Looking for more investment ideas?

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• Spot potential bargains early by reviewing companies flagged in the 61 high quality undervalued stocks before others catch on.
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• Sleep easier at night by filtering for the 69 resilient stocks with low risk scores that score well on resilience and downside protection.

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.