The term shareholder value is tossed around among the investment community and especially corporate boardrooms more than any other buzz word we had to learn in undergrad.
If you have ever taken the gawd awful CFA exam hearing it probably sends shivers down your spine.
You’re given 4 of 5 variables and asked to calculate something within the equation whether it be return on capital or weighted average cost of capital (WACC).
But rarely do we see the theory put into practice….until now.
There are two components to the equation:
Return on Capital which is fairly easy to determine.
Weighted Avg Cost of Capital which is highly subjective to a variety of inputs.
In this piece, I will walk through each component at a high level basis to answer the question, “Is Exxon finally adding shareholder value?”
Lets begin.
First off, let’s begin with a chart of Exxon’s Shareholder Value Add (SVA) going back 104 years because why not?
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