It was only a few weeks ago when Exxon Mobil (NYSE:XOM) agreed to acquire shale oil driller Pioneer Natural Resources (NYSE:PXD). With that, Exxon Mobil is set to become a mammoth petroleum juggernaut. Yet, XOM stock dropped recently due to the company’s earnings results. Nevertheless, value hunters and passive income investors should strongly consider a share position in Exxon Mobil.
As I reported not long ago, Bank of America analysts warned that attacks on energy infrastructure in the Middle East could cause West Texas Intermediate crude oil to surpass $130, $150, or even $250 per barrel. The potential for the petroleum price to move higher and for Exxon Mobil to get a big revenue boost.
I’m seeing a generational opportunity with XOM stock, but lately, the market hasn’t favored Exxon Mobil. That’s perfectly fine, as the market can be shortsighted, and you have a chance to invest in an enduring energy giant at a discount price.
XOM Stock Slides Despite Pioneering Pioneer Deal
Logically, the Exxon Mobil share price ought to be much higher after Exxon Mobil announced its deal to acquire Pioneer Natural Resources. Executives with Exxon Mobil estimated that the company will be able to extract an extra 1 billion barrels of oil and gas from Pioneer’s acreage, which is located in America’s Permian Basin region.
Nonetheless, XOM stock dropped to short-term lows in late October. Perhaps the market doesn’t appreciate Exxon Mobil’s historic and value-added deal to purchase Pioneer’s assets. Furthermore, investors weren’t pleased with Exxon Mobil’s third-quarter 2023 results.
Granted, Exxon Mobil did miss Wall Street’s call for quarterly revenue of $93.4 billion and EPS of $2.37. As it turned out, Exxon Mobil’s actual results were $90.8 billion in revenue and earnings of $2.27 per share.
Those aren’t very wide misses. However, the market can be demanding sometimes. Short-term traders probably weren’t interested in Exxon Mobil’s healthy cash balance, which increased by $3.4 billion in Q3. Moreover, Exxon Mobil’s cash flow from operations totaled $16 billion in 2023’s third quarter. This represents an increase of $6.6 billion compared to the second quarter.
Exxon Mobil Should Appeal to Passive Income Investors
Short-term stock traders also weren’t likely interested in Exxon Mobil’s dividend payments. Yet, this is an essential point as Exxon Mobil returned a whopping $8.1 billion to its shareholders during the third quarter.
Exxon Mobil is committed to rewarding its loyal shareholders. The company proved this again as Exxon Mobil increased its fourth-quarter 2023 dividend to 95 cents per share. To quote Exxon Mobil CEO Darren Woods, “We view the dividend as a commitment.” Now, that’s a statement that passive income investors should want to hear.
On top of all that, Exxon Mobil is committed to cutting its costs. The company had a goal of achieving $9 billion in cost reductions, and Exxon Mobil achieved that objective in the third quarter. Going forward, this should help Exxon Mobil pay its generous dividend distributions every quarter.
XOM Stock: Buy It and Hold It Forever
Truly, Exxon Mobil is committed to providing value to its shareholders. The company is reducing its expenditures and raising its dividend payments. In addition, Exxon Mobil is firming up its energy industry leadership position by acquiring Pioneer Natural Resources.
So, don’t fret if the market doesn’t appreciate Exxon Mobil’s value. Forward-thinking value seekers should be glad to buy and hold XOM stock long-term.
At the same time, passive income investors ought to relish the opportunity to collect Exxon Mobil’s dividend distributions. The company has much to offer for the long term, so now’s a great time to start a share position in Exxon Mobil.
On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
