Exxon Mobil Corp. (NYSE:XOM) isn’t going to decrease its dividend it doesn’t matter what it prices the corporate. That time got here out loud and clear from the corporate’s newest earnings convention name. Which means that XOM inventory will proceed to have a “robust” dividend yield of about 6.15%. It’s value no less than 32% extra, or $74.63 per share, primarily based on its historic dividend yield. Supply: Harry Inexperienced / Shutterstock.com For the previous two years (8 quarters) Exxon has paid 87 cents per share in quarterly dividends. That works out to $3.48 per share every year. Exxon clearly intends to take care of that dividend. Subsequently, at in the present day’s value (April 9) of $55.87, the dividend yield could be very wholesome at 6.2%. Goal Value Based mostly on Historicals Furthermore, primarily based on the corporate’s historic dividend yield, that is a lot increased than its common. For instance, Morningstar stories that over the previous 5 years, its trailing 5-year dividend yield has been 4.96% (nearly 5%).InvestorPlace – Inventory Market Information, Inventory Recommendation & Buying and selling Suggestions We are able to use this to estimate the normalized goal worth for XOM inventory. For instance, if we divide the dividend per share of $3.48 by the common yield of 4.96%, the result’s a goal value of $70.16 per share. This represents a possible achieve of $14.29 or about 26% extra primarily based on in the present day’s value of $55.87. 7 Infrastructure Shares Excited For The $2 Trillion Biden Plan We are able to do the identical factor with the corporate’s earnings-per-share (EPS). Making use of Morningstar’s 5-year avg. price-to-earnings (P/E) ratio of 25.62 occasions (over the past 5 years) to Exxon’s EPS for this yr ($2.87) produces a goal value of $73.53. That’s over 30% above in the present day’s value. Equally utilizing the Morningstar ahead P/E common of 21.75 occasions Exxon’s $3.88 EPS for 2022 produces a goal value of $84.39. Now now we have three totally different value targets primarily based on dividend yield and price-to-earnings. To spherical issues out we will additionally derive a value primarily based on its historic price-to-sales. Morningstar says that is 1.25 occasions over the past 5 years. Analysts predict gross sales of $245.5 billion for 2021, so the worth goal works out to $306.875 billion. That is 29.7% above Exxon’s current market cap of $236.5 billion. In different phrases, XOM inventory is value almost 30% extra or $72.46 per share. That implies that, on common, XOM inventory is value about 34% increased, or $75.14 per share. These ratios are primarily based on earnings and gross sales estimates offered by Looking for Alpha on their Earnings tab for Exxon Mobil inventory. The estimates can range relying on which aggregation service is used. However this offers you an concept that XOM inventory is undervalued primarily based on its historic metrics. One factor to notice is that though the $3.48 dividend exceeds the forecast earnings of $2.87 this yr (2021). However subsequent yr analysts predict EPS of $3.88 per share, which can cowl the dividend, assuming oil and gasoline costs keep excessive. Furthermore, administration mentioned on the fourth-quarter 2020 convention name that money stream from operations ought to cowl the dividend funds this yr. This coincides with their intention to take care of a “robust” dividend, talked about 10 occasions on the convention name. What To Do With XOM Inventory Most analysts have increased value targets for Exxon inventory, however not by a lot. For instance, TipRanks.com says that 18 analysts have a mean value goal of simply $60.68. Equally, Yahoo! Finance says that 25 analysts imagine on common XOM inventory is value $61.18. Nonetheless, Marketbeat.com stories that 24 analysts have a decrease goal of $52.73, whereas Looking for Alpha says that 27 analysts have a mean goal of $61.36. Click on to EnlargeSource: Mark R. Hake, CFA You may see within the desk on the fitting that the median analyst value goal is $60.63, or 7.1% above in the present day’s value. So, on the one hand, that is a lot decrease than my value goal utilizing historic metrics. However then again, understand that my value goal might take a number of years to attain, whereas most analysts are simply looking one yr. For instance, if my 34% increased value goal takes two years, the common annual return can be simply 16% every year on a compounded foundation. Furthermore, the dividend yield is 6.15%. Subsequently the entire return, even when the analysts’ goal value pans out can be 13.25% (i.e., 7.1% value achieve plus 6.15% dividend yield). My goal value produces an anticipated return of 21.95% (i.e., 14.8% achieve plus 6.15% yield). Any approach that you simply take a look at it, XOM inventory appears like cut price right here, assuming oil stays excessive and the inventory returns to its regular historic worth metrics. On the date of publication, Mark R. Hake didn’t maintain a protracted or quick place in any of the securities on this article. Mark Hake writes about private finance on mrhake.medium.com and runs the Whole Yield Worth Information which you’ll be able to assessment right here. Extra From InvestorPlace Why Everybody Is Investing in 5G All WRONG It doesn’t matter when you’ve got $500 in financial savings or $5 million. Do that now. High Inventory Picker Reveals His Subsequent Potential 500% Winner Inventory Prodigy Who Discovered NIO at $2… Says Purchase THIS Now The publish Exxon Mobil Will Maintain Paying Its Dividend, And Might Be Price 30% Extra appeared first on InvestorPlace.