Is Exxon Mobil’s Recent 5.9% Rally Justified by Its Current Valuation?

Curious if Exxon Mobil is actually a bargain at today’s prices? You’re not alone; many investors are wondering whether the company’s value is compelling after recent moves in the oil market. In the past week, Exxon’s stock rose 2.5% and posted a 5.9% gain over the last month, hinting at renewed optimism or shifting risk perceptions among investors. Much of the recent price momentum comes as Exxon continues to make headlines with its expansion in low-carbon initiatives and the completion of key energy infrastructure projects. News of continued buybacks and a strong balance sheet has only added to the interest, keeping Exxon in the spotlight for long-term investors. With a valuation score of 4 out of 6, there is a lot to unpack about how fair Exxon Mobil’s current price really is. Next, we will dig into several valuation approaches and reveal a powerful way to get the full picture at the end of this article.

Exxon Mobil delivered 0.3% returns over the last year. See how this stacks up to the rest of the Oil and Gas industry.

Approach 1: Exxon Mobil Discounted Cash Flow (DCF) Analysis

A Discounted Cash Flow (DCF) model estimates the fair value of a company by projecting its future cash flows and then discounting those amounts back to today using an appropriate rate. This approach aims to reflect the company's real intrinsic value by measuring the money it can return to shareholders over time.

For Exxon Mobil, the current Free Cash Flow stands at $28.1 Billion. Analysts expect this figure to grow over the next several years, with projections reaching $44.7 Billion by 2029. While analyst estimates typically go out only five years, Simply Wall St has extrapolated these numbers out a full decade and is projecting $62.4 Billion in Free Cash Flow by 2035.

Using these future cash flows, discounted back to the present, the DCF method arrives at an intrinsic value estimate of $289.29 per share. Comparing this to the current market price shows the stock is trading at approximately a 59.5% discount to its fair value.

This significant gap suggests Exxon Mobil is strongly undervalued according to the DCF model.

Result: UNDERVALUED

Our Discounted Cash Flow (DCF) analysis suggests Exxon Mobil is undervalued by 59.5%. Track this in your watchlist or portfolio, or discover 874 more undervalued stocks based on cash flows.XOM Discounted Cash Flow as at Nov 2025

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Exxon Mobil.

Approach 2: Exxon Mobil Price vs Earnings

The Price-to-Earnings (PE) ratio is a popular way to value established, profitable companies like Exxon Mobil, because it shows how much investors are willing to pay for each dollar of earnings. This makes it especially useful for comparing firms across the same industry or market.

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A company’s fair PE ratio depends on factors like its growth outlook and risk profile. Higher growth and lower risk typically justify a higher PE, as investors are willing to pay up for future potential. In contrast, lower growth or higher risk demand a lower multiple.

Currently, Exxon Mobil’s PE ratio is 16.5x. This sits above the oil and gas industry average of 13.5x but below the oil and gas peer group average of 22.7x. While these benchmarks provide some context, they do not account for Exxon Mobil’s specific attributes.

That is where Simply Wall St’s “Fair Ratio” comes in. For Exxon Mobil, the Fair PE Ratio is calculated as 22.7x, reflecting its unique blend of earnings growth, industry, market cap, margins, and risk profile. This approach is more tailored than simple comparisons to peers or sector averages, providing a nuanced view that incorporates Exxon’s specific strengths and weaknesses.

Comparing the actual PE ratio of 16.5x to the Fair PE Ratio of 22.7x suggests the stock is currently undervalued based on earnings.

Result: UNDERVALUEDNYSE:XOM PE Ratio as at Nov 2025

PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover 1404 companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your Exxon Mobil Narrative

Earlier we mentioned that there is an even better way to understand valuation, so let’s introduce you to Narratives. A Narrative is your chance to create a story behind the numbers, combining your own fair value, future revenue, earnings, and margin expectations to capture your personal perspective on a company’s true potential.

Unlike traditional methods that only focus on rigid numbers, Narratives connect the company’s unique story to a financial forecast, allowing you to estimate a fair value that aligns with your outlook and research. This tool, available and used by millions on Simply Wall St’s Community page, makes it easy for investors at any level to model their own view of the future and instantly see how it compares to the current market price.

Narratives help you make smarter buy or sell decisions by highlighting the difference between your calculated Fair Value and today’s stock price. They also update automatically whenever new information such as company news or earnings becomes available.

For example, some Exxon Mobil Narratives see fair value as low as $132 per share based on a cautious view of energy demand. Others see it as high as $174 by factoring in aggressive Guyana growth and steady oil prices. This illustrates how different assumptions lead to different conclusions, empowering you to invest with more confidence and context.

Do you think there's more to the story for Exxon Mobil? Head over to our Community to see what others are saying!NYSE:XOM Community Fair Values as at Nov 2025

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Companies discussed in this article include XOM.

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