Conoco And Phillips 66: Sum Of Parts Now Worth Less Than Whole [View article]
Well I do believe that oil is extremely oversold, and I'm definitely bullish on oil long term. At a stock price of $75, that would give COP a trailing P/E of 8.2 which is well below the major integrated oil and gas average of 10.2. So from an earnings perspective, COP was significantly undervalued compared to peers (excluding CVX and BP). And as for margins, the purpose of citing these numbers was to give an idea of the difference between an integrated company, and a refining company. The industry average net profit margins for refining companies, E&P companies, and integrated companies are: 3%, 13.6%, and 7.9%, respectively. So as you can see there are major differences, marginally at the least, between the companies.
Conoco And Phillips 66: Sum Of Parts Now Worth Less Than Whole [View article]
You bring up a good point about the valuation, but from late February to early April COP traded north of $75 (which I believe is a fair value) and was later sold off preceding the spin off. The price declined from around $77 in early April to $72 by the end of the month, although the S&P 500 and DJIA held steady around 1400 and 13200, respectively. And I definitely agree that COP and PSX have held value extremely well relative to the market; but that doesn't mean that the market isn't undervalued itself.
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I also expected a quick recovery but since the USDA announced the probability of a corn surplus this year the whole industry has ben taking a hit. I still believe that the company holds long term value, and that's what I'm all about. I'm also surprised about NOV keeping below $70 for the amount of time it has but I think it has bottomed unless some macro issue affecting oil occurs
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Conoco And Phillips 66: Sum Of Parts Now Worth Less Than Whole [View article]
Conoco And Phillips 66: Sum Of Parts Now Worth Less Than Whole [View article]
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