Textbook Problem

Estimating Exxon Mobil Corporation's Intrinsic Stock Value

Use online resources to work on this chapter's questions. Please note that website information changes over time, and these changes may limit your ability to answer some of these questions.

In this chapter, we described the various factors that influence stock prices and the approaches that analysts use to estimate a stock's intrinsic value. By comparing these intrinsic value estimates to the current price, an investor can assess whether it makes sense to buy or sell a particular stock. Stocks trading at a price far below their estimated intrinsic values may be good candidates for purchase, whereas stocks trading at prices for in excess of their intrinsic value may be good stocks to avoid or sell. Although estimating a stock's intrinsic value is a complex exercise that requires reliable data and good judgment, we can use the Internet to find financial data in order to arrive at a quick "back-of-the- envelope" calculation of intrinsic value.

1. For purposes of this exercise, let's take a closer look at the stuck of Exxon Mobil Corporation (XOM). Use websites such as Yahoo! Finance, Google Finance, MSN Money (www.msn.com/en-us/money/markets). and Morningstar to find the company's current stock price and see its performance relative to the overall market in recent months. What is Exxon Mobil’s current stock price? How has the stock performed relative to the market over the past few months?

Previous Close	73.60
Open	74.35
Bid	74.25 X 100
Ask	74.60 X 500
Day's Range	74.10-75.00
52 Week Range	73.53 - 89.30