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ExxonMobil (XOM) carries the highest earnings multiple in its peer group at 20.5 times, and it is not the best business in that group. Its operating margin ranks fourth of six, and its revenue growth ranks fourth of six as well. The premium is paying for something the standalone refiners don't get credit for; MPC and VLO trade at 13.4x and 15.6x, so it's likely the combination of upstream stability and downstream optionality that's priced in, not refining margins alone.
How Does ConocoPhillips Earn Twice The Margin On The Same Growth?
ConocoPhillips makes the gap plain, though the two aren't the same business: COP is pure upstream, while ExxonMobil's margin blends in lower-margin refining and chemicals volume. ExxonMobil turned $361.06 billion of trailing-twelve-month revenue into a 10.7% operating margin. ConocoPhillips grew revenue 9.6% over those twelve months, the same rate ExxonMobil managed, and earned a 21.9%. Its stock returned 49.9% over those twelve months, narrowly behind ExxonMobil's 51.3%, and it trades at 17.7 times earnings against 20.5.
Market Cap ($ Bil)
