ENERGY SECTOR STOCK PRESENTATION
-
Upload
david-manning -
Category
Documents
-
view
37 -
download
5
description
Transcript of ENERGY SECTOR STOCK PRESENTATION
![Page 1: ENERGY SECTOR STOCK PRESENTATION](https://reader035.fdocuments.us/reader035/viewer/2022070401/56813675550346895d9e02ec/html5/thumbnails/1.jpg)
ENERGY SECTOR STOCK
PRESENTATIONJanelle R. Courtright
John C. Williams
Summer Quarter, 2007
![Page 2: ENERGY SECTOR STOCK PRESENTATION](https://reader035.fdocuments.us/reader035/viewer/2022070401/56813675550346895d9e02ec/html5/thumbnails/2.jpg)
SECTOR RECOMMENDATION
Continue to underweight to S&P 500
Recommend to keep holdings at 270 basis points below S&P
Look to underweight in the next 6 months− Short-term returns to outperform S&P
500− Long-term returns will under perform
Drop in oil prices, cheaper alternatives becoming more available
![Page 3: ENERGY SECTOR STOCK PRESENTATION](https://reader035.fdocuments.us/reader035/viewer/2022070401/56813675550346895d9e02ec/html5/thumbnails/3.jpg)
CRUDE OIL PRICES
![Page 4: ENERGY SECTOR STOCK PRESENTATION](https://reader035.fdocuments.us/reader035/viewer/2022070401/56813675550346895d9e02ec/html5/thumbnails/4.jpg)
Recommendation Sell all of Schlumberger, Ltd.
− 308 basis points
Buy 308 basis points of BP ADS
Hold Exxon (XOM) and Peabody (BTU)
Remain at 270 basis points below S&P 500
![Page 5: ENERGY SECTOR STOCK PRESENTATION](https://reader035.fdocuments.us/reader035/viewer/2022070401/56813675550346895d9e02ec/html5/thumbnails/5.jpg)
Schlumberger, Ltd.
![Page 6: ENERGY SECTOR STOCK PRESENTATION](https://reader035.fdocuments.us/reader035/viewer/2022070401/56813675550346895d9e02ec/html5/thumbnails/6.jpg)
SLB Profile World’s leading oilfield services
provider
Been in business since 1926
Mature company
Cyclical company
Main driver: OIL PRICES
![Page 7: ENERGY SECTOR STOCK PRESENTATION](https://reader035.fdocuments.us/reader035/viewer/2022070401/56813675550346895d9e02ec/html5/thumbnails/7.jpg)
DCF Valuation
![Page 8: ENERGY SECTOR STOCK PRESENTATION](https://reader035.fdocuments.us/reader035/viewer/2022070401/56813675550346895d9e02ec/html5/thumbnails/8.jpg)
SLB Absolute Valuations
StockVal®SCHLUMBERGER LIMITED (SLB) Price 87.741997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
PRICE / YEAR-FORWARD EARNINGS0
20
40
60 HI 69.4 LO 13.7 ME 30.4 CU 18.4
08-01-199708-03-2007
PRICE / SALES2
4
6HI 6.09 LO 2.05 ME 3.75 CU 5.08
08-01-199708-03-2007
PRICE / EBITDA5
10
15
20 HI 99.9 +LO 6.5 ME 14.3 CU 13.9
08-01-199708-03-2007
PRICE / CASH FLOW ADJUSTED6
12
18
24 HI 27.8 LO 7.6 ME 16.6 CU 17.7
08-01-199708-03-2007
![Page 9: ENERGY SECTOR STOCK PRESENTATION](https://reader035.fdocuments.us/reader035/viewer/2022070401/56813675550346895d9e02ec/html5/thumbnails/9.jpg)
SLB Absolute Valuations
StockVal®SCHLUMBERGER LIMITED (SLB) Price 87.742002 2003 2004 2005 2006 20072002 2003 2004 2005 2006 2007 2008
PRICE / YEAR-FORWARD EARNINGS RELATIVE TO S&P ENERGY SECTOR COMPOSITE ADJ (SP-10) M-Wtd1
2
3HI 3.15 LO 1.49 ME 2.16 CU 1.74
08-02-200208-03-2007
PRICE / EBITDA RELATIVE TO S&P ENERGY SECTOR COMPOSITE ADJ (SP-10) M-Wtd0.8
1.2
1.6
2.4HI 99.90 +LO 0.91 ME 2.58 CU 2.64
08-02-200208-03-2007
PRICE / SALES RELATIVE TO S&P ENERGY SECTOR COMPOSITE ADJ (SP-10) M-Wtd2
3
4
5 HI 5.19 LO 2.06 ME 3.61 CU 4.21
08-02-200208-03-2007
PRICE / CASH FLOW ADJUSTED RELATIVE TO S&P ENERGY SECTOR COMPOSITE ADJ (SP-10) M-Wtd0
1
2HI 2.72 LO 0.88 ME 1.88 CU 2.17
08-02-200208-03-2007
![Page 10: ENERGY SECTOR STOCK PRESENTATION](https://reader035.fdocuments.us/reader035/viewer/2022070401/56813675550346895d9e02ec/html5/thumbnails/10.jpg)
SLB Multiple Valuations
Absolute Valuation High Low Mean Current #Your Target Multiple
*Your Target E,S, B, etc/Share
Your Target Price (FxG)
A. B. C. D. E. F. G. H.P/Forward E 69.4 14.3 30.6 20 30.6 3.01 92.106P/S 6.09 2.05 3.75 5.44 3.75 16.32 61.2P/B 10.9 2.5 5.5 9.8 5.5 8.39 46.145P/EBITDA 99.9 6.5 14.4 15.2 14.4 3.98 57.312P/CF 27.8 7.6 16.6 19.2 16.6 3 49.8
Market Price 87.74
Avg $61.31
![Page 11: ENERGY SECTOR STOCK PRESENTATION](https://reader035.fdocuments.us/reader035/viewer/2022070401/56813675550346895d9e02ec/html5/thumbnails/11.jpg)
SLB OVERVALUED DCF Value is lower than market price
Target price is below current market price
Market Price of stock is too expensive based on valuations
Cyclical stock will fluctuate with the price of oil
Recommend: Sell
![Page 12: ENERGY SECTOR STOCK PRESENTATION](https://reader035.fdocuments.us/reader035/viewer/2022070401/56813675550346895d9e02ec/html5/thumbnails/12.jpg)
BP Profile Top 5 Energy Company
Mature company
Investing in and applying new, rapidly evolving technologies from new sources of energy that are low carbon and renewable
During 2006 renewable energy portfolio maintained a profit
Main driver: OIL PRICES
![Page 13: ENERGY SECTOR STOCK PRESENTATION](https://reader035.fdocuments.us/reader035/viewer/2022070401/56813675550346895d9e02ec/html5/thumbnails/13.jpg)
BP DCF
![Page 14: ENERGY SECTOR STOCK PRESENTATION](https://reader035.fdocuments.us/reader035/viewer/2022070401/56813675550346895d9e02ec/html5/thumbnails/14.jpg)
BP – Absolute Valuations
![Page 15: ENERGY SECTOR STOCK PRESENTATION](https://reader035.fdocuments.us/reader035/viewer/2022070401/56813675550346895d9e02ec/html5/thumbnails/15.jpg)
BP – Absolute Valuations
StockVal®BP PLC ADS (BP) Price 66.501997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
PRICE / YEAR-FORWARD EARNINGS RELATIVE TO S&P ENERGY SECTOR COMPOSITE ADJ (SP-10) M-Wtd0.6
0.8
1.0
1.2 HI 1.23 LO 0.77 ME 1.01 CU 0.92
08-01-199708-03-2007
PRICE / EBITDA RELATIVE TO S&P ENERGY SECTOR COMPOSITE ADJ (SP-10) M-Wtd0.6
0.8
1.0
1.2HI 1.55 LO 0.80 ME 1.12 CU 0.89
08-01-199708-03-2007
PRICE / SALES RELATIVE TO S&P ENERGY SECTOR COMPOSITE ADJ (SP-10) M-Wtd0.4
0.8
1.2
1.6 HI 1.82 LO 0.65 ME 1.04 CU 0.68
08-01-199708-03-2007
PRICE / CASH FLOW ADJUSTED RELATIVE TO S&P ENERGY SECTOR COMPOSITE ADJ (SP-10) M-Wtd0.8
1.0
1.2HI 1.35 LO 0.80 ME 1.01 CU 0.86
08-01-199708-03-2007
![Page 16: ENERGY SECTOR STOCK PRESENTATION](https://reader035.fdocuments.us/reader035/viewer/2022070401/56813675550346895d9e02ec/html5/thumbnails/16.jpg)
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
BP PLC ADS (BP)PRICE 66.50 DATE 08-03-2007PRICE 66.50 DATE 08-03-2007StockVal®
2727
2929
3232
3535
3838
4242
4646
5050
5555
6060
6565
7171
78
85
93
The Ohio State UniversityFisher College of Business
Price Change % Diff SP5
1-Day -3.60 -0.94
1-Week -4.25 -2.47
4-Weeks -9.52 -3.16
QTD -7.82 -3.14
YTD -0.89 -1.93
2006 4.48 -9.13
2005 9.97 6.96
2004 18.34 9.34 FYE Dec 2006 EPS 6.54
First Call Data 2007 2008 2009
Mean Estimate 6.20 6.61 7.16Change -5% +7% +8%
High 6.89 8.78 9.42
Low 5.75 5.35 6.15
Total 15 15 6
# Up 7 9 3
# Down 7 4 3
House Estimate
PE Ratio 10.7 10.1 9.3
Revenues ($Mil) 262,933
Market Value ($Mil) 237,818
Shares Out (Mil) 3,576.2
Volume 60-Day Avg (Th) 4,107
Volume 60-Day Avg ($M) 273.1
Dividend Estimate 2.48
Payout Ratio 40%
Retention Rate 60%
Dividend Yield 3.73%
Data Page # 1
![Page 17: ENERGY SECTOR STOCK PRESENTATION](https://reader035.fdocuments.us/reader035/viewer/2022070401/56813675550346895d9e02ec/html5/thumbnails/17.jpg)
BP UNDERVALUED DCF Value is higher than market
price
Absolute valuation shows value in stock
Company investing in future beyond petroleum
Recommend: Buy
![Page 18: ENERGY SECTOR STOCK PRESENTATION](https://reader035.fdocuments.us/reader035/viewer/2022070401/56813675550346895d9e02ec/html5/thumbnails/18.jpg)
Recommendation Sell all of Schlumberger, Ltd.
− 308 basis points
Buy 308 basis points of BP ADS
Hold Exxon (XOM) and Peabody (BTU)
Remain at 270 basis points below S&P 500
![Page 19: ENERGY SECTOR STOCK PRESENTATION](https://reader035.fdocuments.us/reader035/viewer/2022070401/56813675550346895d9e02ec/html5/thumbnails/19.jpg)
ANY QUESTIONS????
![Page 20: ENERGY SECTOR STOCK PRESENTATION](https://reader035.fdocuments.us/reader035/viewer/2022070401/56813675550346895d9e02ec/html5/thumbnails/20.jpg)
SLB DCF
![Page 21: ENERGY SECTOR STOCK PRESENTATION](https://reader035.fdocuments.us/reader035/viewer/2022070401/56813675550346895d9e02ec/html5/thumbnails/21.jpg)
BP DCF