Shares of integrated energy giant ExxonMobil (NYSE: XOM) have nosedived in 2020 as oil prices have plunged to historic lows. With the stock set to be booted from the Dow 30, is this the end of an era, or an investing opportunity for those willing to step in while others are fearful? Here's a look at some of the key risks to understand before making a final call on this oil company.
Let's get the biggest potential risk out of the way up front: An Exxon bankruptcy is highly unlikely in the near term. As it stands, the company has one of the strongest balance sheets of its integrated peers. Exxon's debt-to-equity ratio is roughly 0.38 times. Although Chevron's (NYSE: CVX) 0.25 times is lower, all of the European players have much higher debt-to-equity ratios. At the top end is BP at around 1.1 times. The truth is that 0.38 times is actually a fairly reasonable number, leaving Exxon with ample room on its balance sheet to handle more adversity.
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Source Fool.com