Total SA – Value Analysis (EURONEXT PARIS:FP) : December 19, 2017

Capitalcube gives Total SA a score of 63.

Our analysis is based on comparing Total SA with the following peers – ENGIE SA, BP p.l.c., Repsol SA, Royal Dutch Shell Plc Class A and Statoil ASA (ENGI-FR, BPE5-DE, REP-ES, RDSA-NL and STL-NO).

Investment Outlook

Total SA has a fundamental score of 63 and has a relative valuation of OVERVALUED.

Fundamental Score

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Company Overview

  • Considering peers, relative underperformance over the last year and the last month suggest a lagging position.
  • It’s current Price/Book of 1.26 is about median in its peer group.
  • FP-FR‘s operating performance is relatively good compared to its peers. The market currently does not expect high earnings growth relative to its peers but seems to expect the company to maintain its relatively high rates of return.
  • FP-FR has relatively high profit margins while operating with median asset turns.
  • Changes in annual revenues are in line with its chosen peers but lags in terms of earnings suggesting that the company is less cost conscious and may be spending for growth.
  • FP-FR‘s return on assets currently and over the past five years suggest that its relatively high operating returns are sustainable.
  • The company’s median gross margin and relatively high pre-tax margins suggest non-differentiated product portfolio but with tight cost control relative to peers.
  • FP-FR‘s revenue growth in recent years and current P/E ratio are both around their respective peer medians suggesting that historical performance and long-term growth expectations for the company are largely in sync.
  • The company’s level of capital investment seems appropriate to support the company’s growth.
  • FP-FR seems to be constrained by the current level of debt.

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Leverage & Liquidity

FP-FR is debt-constrained.

  • With debt at a relatively high 32.74% of its enterprise value compared to an overall benchmark of 25% (Note: The peer median is currently 39.51%), and interest coverage level of 3.68x, FP-FR seems debt-constrained.
  • All 5 peers for the company have an outstanding debt balance.

FP-FR has maintained its Some Capacity profile from the recent year-end.

  • FP-FR‘s interest coverage is its lowest relative to the last five years and compares to a high of 33.92x in 2012.
  • While its interest coverage decreased to 3.68x from 5.96x (in 2016), its peer median increased during this period to 3.69x from 2.05x.
  • Interest coverage fell 3.91 points relative to peers (and is now lower than its peer median).
  • FP-FR‘s debt-EV continues to trend downward and is below (but within one standard deviation of) its five-year average debt-EV of 35.05%.
  • Though its debt-EV decreased to 32.74% from 36.75% (in 2016), its peer median remained relatively stable during this period at 39.51%.
  • Relative to peers, debt-EV fell 4.34 percentage points.

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Key Liquidity Items

Company Debt/Enterprise Value (%) Current Ratio Interest Coverage (x) Cash Flow To Total Debt (%)
ENGIE SA 66.44 1.06 3.3 19.39
BP p.l.c. 39.61 1.21 3.22 28.47
Repsol SA 43.09 1.12 3.7 28.61
Royal Dutch Shell Plc Class A 27.5 1.23 4.13 42.66
Statoil ASA 39.41 1.54 8.32 48.23
Total SA 32.74 1.47 3.68 39.34
Peer Median 39.51 1.22 3.69 33.98
Best In Class 27.5 1.54 8.32 48.23

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Company Profile

Total SA explores, develops, produces and markets oil and gas. It is also engaged in trading and shipping of crude oil and petroleum products. The company operates through the following segments: Upstream, Refining & Chemicals and Marketing & Services. The Upstream segment includes the activities of exploration & production and gas. The Refining & Chemicals segment encompasses refining, petrochemicals and specialty chemicals operations. This segment also includes the activities of trading & shipping. The Marketing & Services segment includes worldwide supply and marketing activities in the oil products and services field as well as the activity of New Energies. The company was founded on March 28, 1924 and is headquartered in Courbevoie, France.

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