ExxonMobil (NYSE:XOM), touted as the benchmark energy mega-cap, has recently produced very disappointing returns. So is this a buying opportunity for this stalwart of Wall Street, or is it time to trade ExxonMobil in for a more promising name?

As a percentage of market cap, ExxonMobil has one of the worst capital reinvestment results in the industry. This sad fact is exacerbated by the latest announcement that ExxonMobil plans to cut capital spending by 6% this year and expects production to be flat.

ExxonMobil also pays one of the lowest yields among its peers at 2.7%. That's a real return (subtracting for inflation) of around 1%. Compare this to the average yield of its competitors of 4.9% and Exxon looks pretty boring.

It also appears overpriced compared to industry averages, with a price-to-book ratio of 2.3 versus an industry average P/B of 1.5. Also, the price-to-sales ratio of nearly 1 is far greater than the industry average of 0.6. It's hard to justify paying a premium for a company that is cutting reinvestment, has flat expectations, and a (relatively) meager yield.

So what should you own instead?
For the growth-oriented energy investor, Schlumberger (NYSE:SLB) seems to hold quite a bit of potential. This oil and gas services company seeks to capitalize on the increasingly technological methods of extracting oil and gas while optimizing the process -- not a bad business to be in if you have faith in the U.S. energy renaissance.

Schlumberger has posted some impressive numbers over the last three years, with earnings per share, revenue, and dividend increases all showing double-digit growth. Wall Street is looking for these trends to continue, with analysts expecting FY 2014 to result in a 22% earnings increase over FY 2013.

For the yield-oriented investor, perhaps Seadrill (NYSE:SDRL) is the better choice. In late 2013 Seadrill suffered a drop from which it has yet to fully recover. As a result Seadrill is boasting a 10.8% yield. This comes at the expense of a 69% payout ratio. With earnings growth for FY 2014 projected at 39% and FY 2015 at 20%, it looks like this dividend is safe for the immediate future. One final note is that Seadrill operates on a contract basis, which allows it to lock in long-term business while remaining unaffected (to a degree) by commodity price swings.

Bottom line
It's often hard to say goodbye to old investments that have been in your portfolio for years, maybe even decades. But when new investments offer so much more potential, sentimentality should take a back seat. Both Seadrill and Schlumberger should outperform ExxonMobil in the coming years, either through income from the former or growth from the latter. Yes, this is a buying opportunity -- just not for ExxonMobil.

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James Catlin has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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