Friday 12 July 2013

Analysis of Total

French oil and gas company

Company: Total

Business: This French oil & gas company which is the fifth biggest in the world is divided into three parts: Refining & Chemicals including Trading & Shipping, Marketing & Services including Solar and Biomass activities and finally Exploration & Production and Gas & Power.

Active: Total is active all over the world and are currently operating in more than 130 countries.

P/E: 8.3


containing P/E and P/B values as well as dividend

The P/E for Total is very nice with 8.3 and the P/B is ok with its 1.2 which by using the formula from Graham gives a clear buy signal. The earnings to sales is only 5% but it is nothing unusual in the business. The book to debt is acceptable with its ratio of 0.75. The growth in the last five years have been 2.1% which is good because like for all oil companies 2008 was a great revenue year. Based on the growth for the last five years we end up with a motivated P/E around 12 which means that the stock is today cheaply valued on the market. The try to stay on top and therefore they spend 13.5% of their earnings on research and we all know that these companies must already today start to prepare for a future without oil and gas which will then be based on bacteria or other simple cells for producing longer carbon chains that can be used in the chemical industry. They pay an excellent dividend of 6.3% which represents 52% of the earnings so they will be able to keep that up.

Conclusion: Total is looking very good. They are a solid company with nice dividends that one can today buy very cheaply on the market. A very clear buy and hold company. I would therefore be interested in owning Total already today.

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