3 Reasons Not to Sell ExxonMobil Stock
ExxonMobil's (NYSE: XOM) troubles don't seem to be ending. Rising debt levels and mega capital spending plans in an unfavorable oil price environment led to a steep fall in the stock's price over the past few years. Its removal from the Dow Jones Industrial Average Index has further aggravated investors' concerns about the oil giant, which at one time was the largest listed company by market capitalization. ExxonMobil stock has fallen more than 40% in 2020. But there are reasons why you shouldn't sell this stock just now.
One key factor that contributed to ExxonMobil's survival for more than 100 years is its financial discipline. With rising debt levels recently, though, investors are concerned that ExxonMobil isn't keeping up on this front. Consistently low oil and gas prices have impacted the company's earnings in the last few years, but it has proceeded with its massive growth plans. This has taken a toll on its balance sheet. Additionally, an unprecedented fall in oil demand due to the coronavirus pandemic severely hit ExxonMobil's performance in the second quarter, preventing it from making any debt repayments from earnings.
ExxonMobil's balance sheet is clearly more stretched than Chevron's (NYSE: CVX), but it still stands better than its global peers BP (NYSE: BP), Royal Dutch Shell (NYSE: RDS.A) (NYSE: RDS.B), and Total (NYSE: TOT).
Source Fool.com
