Total (NYSE:TOT) has not experienced the upside seen by the rest of the market this year and seems to be ripe for an opportunity here. It is one of the few oil stocks that hasn't come close to reaching its pre-credit crisis highs, suggesting that it is being overlooked. The valuation metrics suggest as much as the stock is undervalued both on a trailing valuation basis as well as a relative valuation basis versus competitors. Demand for oil isn't going away any time soon.
The company pays a nice sized dividend too. Its dividends over the past 12 months have totaled about $3.20 per share which would be a yield of over 5.5% at today's prices. Below is a closer look at the valuations and the stock charts.
Valuation: Total's trailing 5 year valuation metrics suggest that the stock is undervalued as all of the metrics are below their respective 5 year averages. Total's current P/B ratio is 1.4 and it has averaged 2.5 over the past 5 years with a high of 6.4 and low of 1.1. Total's current P/S ratio is 0.6 and it has averaged 0.8 over the past 5 years with a high of 2 and low of 0.4. Total's current P/E ratio is 7.8 and it has averaged 9.6 over the past 5 years with a high of 17 and low of 5.8.
Price Target: The consensus price target for the analysts who follow Total is $63. That is upside of 12% from today's stock price of $56.24 and suggests that the stock is fairly valued at these levels. This also suggests that the stock has limited upside and should be avoided at its current stock price.
Forward Valuation: Total is currently trading at about $56 a share with analysts expecting EPS of $7.08 next year, an earnings increase of 1% y/y, for a forward P/E ratio of 7.9. Taking a look at the company's publically traded comparisons will give us a better idea of the stock's relative valuation. PetroChina (NYSE:PTR) is currently trading at about $150 a share with analysts expecting EPS of $14.56 next year, an earnings increase of 27% y/y, for a forward P/E ratio of 10.3.
Petroleo Barsileiro (NYSE:PBR) is currently trading at about $31 a share with analysts expecting EPS of $3.11 next year, an earnings decline of -5% y/y, for a forward P/E ratio of 9.8. China Petroleum and Chemical (NYSE:SNP) is currently trading at about $115 a share with analysts expecting EPS of $11.9 next year, an earnings increase of 13% y/y, for a forward P/E ratio of 9.7. The mean forward P/E of Total's competitors is 9.9 which suggests that Total is undervalued relative to its publically traded competitors.
Earnings Estimates: Total has beat EPS estimates 2 times in the past 4 quarters. The company's EPS figures have come in between -5 cents and 5 cents from consensus estimates or about -2.7% to 2.7% from analyst estimates. The company's earnings come been relatively close to consensus estimates which suggests that analysts are good at projecting the company's results and share upside from earnings surprises will be limited.
Price Action: Total is down 8.5% over the past year, underperforming the S&P 500, which is up 5%. Looking at the technicals, the stock is currently above its 50 day moving average, which sits at $52.8894 and above its 200 day moving average, which sits at $50.88.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.