Can geopolitical tensions prove to be a boon for Exxon (XOM) stock?

February 22, 2022 05:53 AM PST | By Rupam Roy
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  • The XOM stock gave a return of over 42% over the past 12 months
  • Exxon's revenue surged over 82% in Q4, FY21
  • The S&P 500 energy sector increased by 21.78% YTD

The Exxon Mobil (XOM) stock surged over 2 per cent during pre-market trading hours, indicating increased investors’ attention on Tuesday, February 22.

Over the years, various income-focused investors have shown their interests in this Irving, Texas-based oil and gas firm as it maintained a steady return.

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Why Exxon is gaining attention?

Despite the hurdles in the market, Exxon has witnessed steady growth in recent months. Exxon intends to shift its focus towards the clean-energy sector, but it cannot happen overnight and it remains a fossil-fuel behemoth.

During its fourth-quarter earnings release in early February, the oil and gas corporation said that it is planning to reduce its emissions. But, it also reported that its production volume in the Permian region in Texas rose by about 100,000 oil-equivalent barrels per day in the prior year. So, it is anticipated that the high oil prices may also help gains in the company in the company years.

In addition, it recently announced a new petroleum-production activity in the offshore-Guyana region, indicating its dominating position in the global oil drilling operations.

Another reason for the stocks' increasing traction in the market is the dividend and the return it is providing to the investors. In addition to that, the elevated gasoline price may also help gains in the firm.

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Elevated gasoline price

Recently, the geopolitical tension between Russia and Ukraine along with the elevated inflation has bumped the oil prices higher. In addition, the Covid-19 outbreak has also disrupted global operations while affecting the market severely.

Meanwhile, the average price of US gasoline has reached US$3.50 now, representing an increase of over US$1 from the prior year, the American Automobile Associated reported.

Due to the unexpected surge in the prices, the Democratic lawmakers reportedly seek to remove America's federal gas tax.

The current federal gas tax is about US$0.18, which may sound cheap but it proves to be a big deal for the Americans in paying the taxes. While many experts are anticipating that the gasoline price will remain at this level, others suggested that it might go even higher. Notably, it is also estimated that the Russia-Ukraine tension may spur the prices higher in the coming days.

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Pricing and performance highlights of Exxon Mobil Corporation

The XOM stock traded at US$79.07 at 6:02 am ET on February 22, up 2.21% from its previous close. It has a market cap of US$327.92 billion, with a P/E ratio of 14.35, and a forward P/E one year of 11.29. Its current yield is 4.55% and its annualized dividend is US$3.52.

The XOM stock's 52-week highest and lowest stock prices were US$83.08 and US$51.91, respectively. Its price soared 42.47% over the past 12 months.

Its total revenue and other income surged over 82% YoY to US$84.96 billion in Q4, FY21, while its attributable net income came in at US$8.87 billion, or US$2.08 per share.

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The whole financial market witnessed a sharp decline in recent days, mainly due to the concerns over Fed's anticipated multiple rate hikes through this year. The S&P 500 index declined 8.76% YTD. But amid this turmoil in the market, the energy sector has maintained a steady momentum, while the S&P 500 energy sector increased by 21.78% YTD.

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