In the world of energy stocks, there are few giants that can match up to Chevron Corp. (NYSE: CVX) and ExxonMobil Corp. (NYSE: XOM).
But which one is the better buy?
Investors must consider a number of factors to decide, and that’s where Stock Power Ratings comes in.
Today, I’ll take a look at some key considerations for investing in either of these energy titans and show you how they stack up in our proprietary system.
Chevron and Exxon: American Oil Giants
Chevron and ExxonMobil stocks look very similar at first glance.
Both stocks have performed well over the last year or so (more on that below), and they both sport solid dividend payouts: 3.3% for CVX and 3.4% for XOM.
I’ll use our proprietary Stock Power Ratings system to give you the full picture on both of these stocks.
But first, let’s see how these companies became stalwarts in the oil industry.
The History of Chevron and ExxonMobil
Chevron and ExxonMobil look like two powerhouses of similar stature and they followed similar paths to success — albeit at different times.
Chevron started as Chevron Oil, which was founded by businessman Thomas Leiper Scott in 1879. It eventually merged with Gulf Oil in 1984, amassing retail outlets across the U.S. that created what we know as Chevron today.
On the other hand, ExxonMobil is much newer: It was formed by the merger of Exxon and Mobil in 1999.
But both companies originated from two businesses founded in the late 19th century called Standard Oil Company of New Jersey and Standard Oil Company of New York, respectively.
Price Comparison of Chevron Stock and Exxon Stock
Chevron and ExxonMobil are two of the largest oil and gas companies in the world, and their market caps (outstanding shares times current stock price) reflect that. As I write, CVX sports a $328 billion market cap, while XOM comes in at $433 billion.
Chevron stock (orange line) has traded higher throughout the years, although fluctuations occur based on market conditions:
Stock Movement: CVX vs. XOM
Both stocks tend to be less volatile than most other securities. You’ll see that reflected in their volatility factor scores within Stock Power Ratings below. But as you can see from the chart above, Chevron’s overall stock performance has been slightly better than Exxon’s stock (blue line) over time.
Since 2013, CVX has gained 61% while XOM is up 21.7%.
CVX vs. XOM: Stock Power Ratings
Now, we can dive into our proprietary Stock Power Ratings system to get a full picture of both of these stocks.
I’ll start with CVX:
CVX’s Stock Power Ratings in December 2022.
CVX scores a 91 out of 100 on our Stock Power Ratings system.
That means we are “Strong Bullish” on the stock and expect it to outperform the broader market by 3X over the next 12 months.
CVX earns its highest mark on our quality factor, where it earns a 95.
Its returns on assets, equity and investment are all positive by double digits. As I write, CVX’s net margin is 15% compared to the integrated oil and gas industry average of 13.5%.
The stock also scores high on momentum (84) and value (90).
Let’s dive into XOM’s ratings next:
XOM’s Stock Power Ratings in December 2022.
Overall, Exxon stock scores a 94 out of 100 on the Stock Power Ratings system.
Like CVX, we are “Strong Bullish” on the stock and expect it to outperform the broader market by 3X over the next 12 months.
XOM’s highest rating is also on quality where it earns 96 on the factor.
It has slightly higher returns on assets, equity and investment than CVX, but a lower net margin (13.3%).
Exxon stock does score higher on value (91), momentum (93) and volatility (88) than Chevron.
The last thing to compare is the dividend payout for both stocks.
Currently, CVX has a forward dividend yield of 3.34%, earning shareholders $5.68 per year for every share they own.
XOM, on the other hand, has a forward dividend yield of 3.46%, meaning you earn $3.64 in dividends each year for every share owned.
The bottom line: Both CVX and XOM score high on our Stock Power Ratings system.
Their differences are slight.
The biggest separation is in their dividend payout … CVX pays $2 more per share per year than XOM.
In the end, our Stock Power Ratings system tells us you can’t go wrong with either of these stocks as the energy bull market carries on.
Of course, my colleague Adam O’Dell has something even better for you in the energy sector.
He’s targeting a super bull in oil with one stock.
And he sees it gaining 100% in 100 days once things get underway in earnest.
If you want to know why, click here to sign up for his upcoming presentation.
It’s less than a week away on December 28 at 4 p.m. Eastern. Don’t miss it.
Safe trading,
Matt Clark, CMSA®
Research Analyst, Money & Markets