Major Integrated Oil and Gas

Major Integrated Oil & Gas (COP CVX XOM)

After running ConocoPhillips, Chevron, and Exxon Mobile through my spreadsheets yesterday, I thought it would be a fun and practical exercise to compare these three companies today and identify the strongest business. After seeing the companies side-by-side, it looks to me like Chevron is the winner. Chevron has the most stable gross profit margins of the three companies and saw the greatest growth of net profit to total revenue ratio. They also feature the strongest earning per share growth over the last three years. Furthermore, Chevron showed the lowest SGA expenses with a trend towards continued lower costs. Chevron also has strong debt and liquidity ratios and 20+% returns on equity. Chevron’s exploration expenses were slightly higher than Exxon Mobile and had a lower return on equity compared to Exxon, but XOM has shrinking gross profit margins and weaker EPS growth. The weakest stock of the three is ConocoPhillips, with low profit margins and large debt issues.

CVX is currently trading at the highest price of the trio, but when compared using the PEG ratio and three-year growth rate, we find that Chevron is still an undervalued stock.


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