Rockefeller & Raymond's Return on Equity.

The decade from 1998 to 2008, under Lee Raymond, was truly unprecedented in ExxonMobil’s history. You have to go back to the Standard Oil era to find a comparable period—returns on equity increased roughly 3.5x.

It was a supercycle—with a cherry on top.

This period drove the strongest outperformance in XOM share price history, both on an absolute total return basis and relative to the S&P 500.

In this post, we go back to some CFA 101 concepts to examine how ExxonMobil achieved this.

Let’s start with the basics.

Return on equity (ROE) can be broken down into three components using the DuPont framework:

Profit margins × Asset turns × Financial leverage, as shown below.