This leading energy company reported better third-quarter revenue numbers than expected, but they were way down from the year-ago period. Cowen analysts are very positive on Exxon Mobil Corp. (NYSE: XOM) long term as the overall corporate strength of the world’s largest international integrated oil and gas company plays a significant part in its usually solid earnings reporting pattern.
The company’s global downstream chemical segment plays a huge part for Exxon. It may be a part that many others on Wall Street don’t fully appreciate as the segment contributes an estimated 16% of overall total revenue. A very solid reason for adding the stock to a long-term growth portfolio is that the company has consistently demonstrated disciplined investing, operational excellence and technological innovation.
Exxon recently appointed the head of its refining business as its new president, which makes him the probable successor to Chief Executive Officer Rex Tillerson, a move that was designed to avoid raising eyebrows on Wall Street. The new president, Darren Woods is a 23-year company veteran who should keep the goliath on the steady path for growth and progress.
Exxon investors receive a very sizable 3.7% dividend. Cowen has a $92 price target. The consensus price objective is lower at $83.85. Shares closed Tuesday at $79.43, down almost 15% for the year.
Based in France, Total S.A. (NYSE: TOT) is a global integrated energy producer and provider, a leading international oil and gas company, and the world’s second-ranked solar energy operator with SunPower. Its Upstream segment explores and produces oil and gas; ships, trades and markets natural gas, liquefied natural gas and liquefied petroleum gas (LPG); generates power; and mines and markets coal.
The Refining & Chemicals segment refines and produces petrochemicals and provides sealing, insulation, fluid transfer and transmission and transportation solutions, as well as offers chemical processes and services for electronics, surface finishing and semiconductor manufacturing. It is also involved in trading and shipping crude oil and petroleum products.
The Marketing & Services segment supplies and markets petroleum products, including automotive fuels, biofuels, home heating oil and heavy fuel oil, lubricants, LPG, asphalt, aviation fuel, additives and special fuels and special fluids through service stations for light vehicles and trucks.
The company continues to generate solid revenues despite the massive downturn in price over the past year. In fact, Total earned $1.07 billion, or $0.45 per share, in the third quarter of 2015, down from the $3.53 billion, or $1.52 per share, earned in the third quarter of 2014. Over the first nine months of 2015, the company’s net income was $8.4 billion. The main drivers behind the company’s ability to stay profitable include an increase in oil and gas manufacturing and strong growth in the company’s very profitable refining division.
Total investors receive a strong 4.93% dividend. The Cowen price target is $58, and the consensus target is $54.86. The stock closed on Tuesday at $46.14.
The Cowen plan is simple and genius. Buy huge integrateds that pay outsized dividends, have good assets and production, and be patient. The other good thing is the overall safety of these leaders makes them suitable for almost all accounts.