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Total Is Totally Oversold

Mar. 02, 2020 9:52 AM ETTotalEnergies SE (TTE)9 Comments
Cash-Centered Creep profile picture
Cash-Centered Creep


  • Total's share price has been hit by the panic surrounding the coronavirus epidemic.
  • It has a strong balance sheet, an excellent dividend record and a durable business model.
  • It is currently undervalued.

Total SA (TOT) is an energy supermajor that has seen its share price tumble in the wake of the coronavirus epidemic. However, while this short-term event has dented the share price, I contend that the quality of the underlying business remains top-tier, and that a value opportunity is being presented.

Total is far from being alone in being affected by the panic generated by the coronavirus epidemic. Crude oil prices (BNO) (USO) overall have tanked more than 20% from a January high.

Crude oil is down more than 20% from a high in early January. Chart generated by FinViz.

The global economy in general, and the Chinese economy in particular, has been hindered by the epidemic, and demand for crude oil has dwindled, leading to an excess of supply. While I certainly cannot forecast when the epidemic will be contained - and its recent spread worldwide would make it foolish to even attempt such a forecast - I am confident that it will be contained eventually, and that the current panic amounts to a serious but short-term event.

The ADR for Total SA is currently trading on the New York Stock Exchange in the mid-$40 price range. Chart generated by FinViz.

This leads me to see Total as a potential value opportunity at this time. Currently, Total's sponsored ADR is trading at a share price of $43.31 with a price-to-earnings ratio of 10.51, as earnings per share (trailing twelve months) is $4.18. It also sports a dividend yield of 6.67%, which is higher than the five-year average dividend yield of 5.42%. The current P/E, meanwhile, is considerably lower than the five-year average P/E of 27.29. It seems that Total is trading at a considerable discount to fair value, which begs the question: what is fair value for Total?

To determine

This article was written by

Cash-Centered Creep profile picture
Buy and hold, common stock investor focused on dividends and on value. Interested in various stocks that are suitable for long-term dividend investment. A Buffett admirer, but not a Buffett cultist, and not quite as creepy as my name implies - though certainly cash-centered!

Analyst’s Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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Comments (9)

S_J profile picture
have been eyeing TOT since recent slump. But i am not too sure about the tax system for this European shares. Reading from internet, not only the withholding tax we need to pay for the divvy, but the capital gain will be taxed as well?

i am not a resident of France. Hopefully there will be some expert to shed some light on this matter. Really appreciate and thanks in advance.
Little, Einstein profile picture
Baker Hughes Company, a good bet, they are out of shale
It would be nice if they had more ran 3% of their company in solar, batteries production and charging stations. Electric cars over the next 10 years and beyond will mean a lot less demand for gasoline and oil. At least they have a small exposure to faster growing areas.
Electric adoption will be slow growing trend.. TOT is investing more than anyone else in renewable among big energy..1-2 billion a year adds up
Veritas1010 profile picture
30% foreign withholding tax coupled with (thankfully!) a small ADR fee. Ouch! To much state socialist with this company!

At these levels $TOT is inarguably a buy, but I decided to put more of my hard earned money into $RDS.B instead recently. Electrification goals clearly stated, and no foreign withholding taxes and a higher outright dividend.

Total is fine if you want more international energy diversity. At the moment however BP is looking better at 8% yield on cost and a newly raised dividend. BP has stated a goal of carbon neutrality by 2050. Alas I do not own at present.

Thank you however for the article.

disc.: long $RDS.B, $XOM, much smaller new positions in $REPYY (REPSOL), and GALP, ($GLPEY)
nobody will remember these carbon neutral goals in 30 years...it's just PR fluff..Looks good short term.
Your "valuation method" used doesn't look adequate at all...

That's more like a guess based on past stock performance...
That's definitely not the way to get to a valuation!!!
There are probably many books written about how to value oil producers specifically, so if it would be this easy than many people would waste their time doing actual scientific research
Bought a bit too early, but only a small amount. Will add more to my position soon. This is a steal right now imo, though I assume it could get a bit worse still before it gets better.
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