Stock Analysis on Net
Stock Analysis on Net

Exxon Mobil Corp. (NYSE:XOM)

Present Value of Free Cash Flow to Equity (FCFE)

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In discounted cash flow (DCF) valuation techniques the value of the stock is estimated based upon present value of some measure of cash flow. Free cash flow to equity (FCFE) is generally described as cash flows available to the equity holder after payments to debt holders and after allowing for expenditures to maintain the company asset base.

Intrinsic Stock Value (Valuation Summary)

Exxon Mobil Corp., free cash flow to equity (FCFE) forecast

US$ in millions, except per share data

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Year Value FCFEt or Terminal value (TVt) Calculation Present value at 9.63%
01 FCFE0 23,665
1 FCFE1 25,645 = 23,665 × (1 + 8.37%) 23,392
2 FCFE2 27,609 = 25,645 × (1 + 7.66%) 22,971
3 FCFE3 29,529 = 27,609 × (1 + 6.95%) 22,410
4 FCFE4 31,373 = 29,529 × (1 + 6.25%) 21,718
5 FCFE5 33,110 = 31,373 × (1 + 5.54%) 20,907
5 Terminal value (TV5) 853,714 = 33,110 × (1 + 5.54%) ÷ (9.63% – 5.54%) 539,065
Intrinsic value of Exxon Mobil Corp. common stock 650,463
 
Intrinsic value of Exxon Mobil Corp. common stock (per share) $156.11
Current share price $146.44

Based on: 10-K (reporting date: 2025-12-31).

1 See details »

Disclaimer!
Valuation is based on standard assumptions. There may exist specific factors relevant to stock value and omitted here. In such a case, the real stock value may differ significantly form the estimated. If you want to use the estimated intrinsic stock value in investment decision making process, do so at your own risk.

Required Rate of Return (r)

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Assumptions
Rate of return on LT Treasury Composite1 RF 4.84%
Expected rate of return on market portfolio2 E(RM) 17.36%
Systematic risk of Exxon Mobil Corp. common stock βXOM 0.38
 
Required rate of return on Exxon Mobil Corp. common stock3 rXOM 9.63%

1 Unweighted average of bid yields on all outstanding fixed-coupon U.S. Treasury bonds neither due or callable in less than 10 years (risk-free rate of return proxy).

2 See details »

3 rXOM = RF + βXOM [E(RM) – RF]
= 4.84% + 0.38 [17.36% – 4.84%]
= 9.63%

FCFE Growth Rate (g)

FCFE growth rate (g) implied by PRAT model

Exxon Mobil Corp., PRAT model

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Average Dec 31, 2025 Dec 31, 2024 Dec 31, 2023 Dec 31, 2022 Dec 31, 2021
Selected Financial Data (US$ in millions)
Dividends, common shares 17,231 16,704 14,941 14,939 14,924
Net income attributable to ExxonMobil 28,844 33,680 36,010 55,740 23,040
Sales and other operating revenue 323,905 339,247 334,697 398,675 276,692
Total assets 448,980 453,475 376,317 369,067 338,923
Total ExxonMobil share of equity 259,386 263,705 204,802 195,049 168,577
Financial Ratios
Retention rate1 0.40 0.50 0.59 0.73 0.35
Profit margin2 8.91% 9.93% 10.76% 13.98% 8.33%
Asset turnover3 0.72 0.75 0.89 1.08 0.82
Financial leverage4 1.73 1.72 1.84 1.89 2.01
Averages
Retention rate 0.52
Profit margin 10.38%
Asset turnover 0.85
Financial leverage 1.84
 
FCFE growth rate (g)5 8.37%

Based on: 10-K (reporting date: 2025-12-31), 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31).

2025 Calculations

1 Retention rate = (Net income attributable to ExxonMobil – Dividends, common shares) ÷ Net income attributable to ExxonMobil
= (28,844 – 17,231) ÷ 28,844
= 0.40

2 Profit margin = 100 × Net income attributable to ExxonMobil ÷ Sales and other operating revenue
= 100 × 28,844 ÷ 323,905
= 8.91%

3 Asset turnover = Sales and other operating revenue ÷ Total assets
= 323,905 ÷ 448,980
= 0.72

4 Financial leverage = Total assets ÷ Total ExxonMobil share of equity
= 448,980 ÷ 259,386
= 1.73

5 g = Retention rate × Profit margin × Asset turnover × Financial leverage
= 0.52 × 10.38% × 0.85 × 1.84
= 8.37%

FCFE growth rate (g) implied by single-stage model

g = 100 × (Equity market value0 × r – FCFE0) ÷ (Equity market value0 + FCFE0)
= 100 × (610,181 × 9.63% – 23,665) ÷ (610,181 + 23,665)
= 5.54%

where:
Equity market value0 = current market value of Exxon Mobil Corp. common stock (US$ in millions)
FCFE0 = the last year Exxon Mobil Corp. free cash flow to equity (US$ in millions)
r = required rate of return on Exxon Mobil Corp. common stock

FCFE growth rate (g) forecast

Exxon Mobil Corp., H-model

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Year Value gt
1 g1 8.37%
2 g2 7.66%
3 g3 6.95%
4 g4 6.25%
5 and thereafter g5 5.54%

where:
g1 is implied by PRAT model
g5 is implied by single-stage model
g2, g3 and g4 are calculated using linear interpolation between g1 and g5

Calculations

g2 = g1 + (g5 – g1) × (2 – 1) ÷ (5 – 1)
= 8.37% + (5.54% – 8.37%) × (2 – 1) ÷ (5 – 1)
= 7.66%

g3 = g1 + (g5 – g1) × (3 – 1) ÷ (5 – 1)
= 8.37% + (5.54% – 8.37%) × (3 – 1) ÷ (5 – 1)
= 6.95%

g4 = g1 + (g5 – g1) × (4 – 1) ÷ (5 – 1)
= 8.37% + (5.54% – 8.37%) × (4 – 1) ÷ (5 – 1)
= 6.25%