STO's Growth Will Blow Out Earnings
The new high price of oil and gas has pushed the price of many of the oil and gas producers higher. Many of these are owned by their governments, but in some cases we see some that have United States ADRs. These ADRs have been quite profitable recently, and I believe they still are. Even if the current prices to go down, which I don't think they will in the next three months, they will still be well positioned going forward as they have huge production increases on line to pick up the slack is oil goes lower. Companies like PBR are riding high even though their large find won't come on line for years.

StatoilHydro ASA (STO) seems to be well positioned and a value with a PE of 14. This earnings period has posted one win after another with respect to this sector. STO is well diversified and has a very large presence with respect to oil drilling. Earnings estimates have this company growing 67% year over year. Full year growth estimates are at 40%. Last quarter, this company missed earnings estimates by 22%, but the future looks better. Remember, there is only one analyst covering the stock quarterly, so there can be fluctuations both up and down.
STO looks to be increasing production to 2 million barrels by 2012. The stock, even as it has climbed as of late, had priced in the miss in production for 2007, so a much more reasonable expectation this quarter is expected. Also, there are tax synergies that should start to be realized this quarter as the oil and gas company was taken over by Norsk Hydro last year.
Looking at the numbers, most of the increase in earnings is attributed to the merging of oil and gas assets and does not truly show the synergies created through cost savings and growth. I believe earnings will come in closer to a dollar ten per share based on this and tax savings. This stock put a bottom in on January 29th on huge volume. It is now in breakout mode and should hit 43 in the next few months. I believe with earnings growth built by the increase of oil and gas pricing along with growth in the business warrants a much higher multiple. The current trend and double top breakout on April 7th show that the stock should move towards $59.
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This article has 10 comments:
- Yaz
- 3 Comments
May 13 08:57 AMThe above link is the list of the 36 analysts that have registered with StatoilHydro. About 20 of them have US phone numbers. This notion that STO is some undiscovered company followed by one analyst is nonsense.
- Yaz
- 3 Comments
May 13 11:04 AM- Yaz
- 3 Comments
May 13 11:14 AM- legmaker
- 78 Comments
My Website
May 13 11:25 AM- bearfund
- 436 Comments
May 14 12:59 AMDisclosure: Long STO.
- legmaker
- 78 Comments
My Website
May 14 09:15 AM- swimjames
- 122 Comments
May 14 06:38 PM- legmaker
- 78 Comments
My Website
May 18 12:00 PM- HA65MPH
- 6 Comments
May 21 11:26 PM- bullit
- 1 Comment
Jul 17 06:47 AMMore by Michael Filloon
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