As oil/gas reserves have been depleting with time, a large part of these reserves are now controlled by national entities. However, there is still a large share of oil that the private sector explores, produces, and refines. In this article, I will be comparing three major oil companies – Exxon Mobil Corporation (NYSE:XOM), TOTAL S.A. (ADR) (NYSE:TOT), and Petroleo Brasileiro Petrobras SA (ADR) (NYSE:PBR) – in terms of value being offered to investors.
Financial review
Currently, Exxon Mobil Corporation (NYSE:XOM) is a renowned stock, providing a stellar return on equity. Its ROE indicators are head and shoulders above peers. Total has its ROE metrics in double digits, while Petrobras experiences the primary drawback of state owned companies – the drop in efficiency and lower than expected results. Total and Exxon have kept their debt under control, while Total significantly decreased its total debt last year.
Over the last three years, Exxon Mobil Corporation (NYSE:XOM)’s growth and the grand nature of its operation have been providing a high growth rate. While Total and Petrobras have done well on this metric, they are easily outperformed by Exxon again. All three companies have been enjoying healthy sales growth over the last three years.
There is another key factor of a company’s financial health. I am talking about costs. Petroleo Brasileiro Petrobras SA (ADR) (NYSE:PBR) performs really badly in this aspect. Its net income growth is negative due to the inefficient bureaucratic structure and poor control over operational costs. The said drawbacks are costing the Brazilian giant in a massive way. TOTAL S.A. (ADR) (NYSE:TOT) and Exxon, on the other hand, are neck to neck in this point.
Competition
| Indicator | Total | Petroleo Brasileiro (NYSE:PBR) Petrobras | ExxonMobil |
|---|---|---|---|
| Market Cap | $131.1 bil | $102.0 bil | $402.8 bil |
| Price/Earnings ttm | 9.9 | 10.7 | 9.2 |
| Price/Book | 1.1 | 0.3 | 2.4 |
| Net Income Growth (3 Yr Avg.) | 8.2 | -10.7 | 15.8 |
| Revenue Growth (3 Yr Avg.) | 17.6 | 16.2 | 32.5 |
| Dividend Yield , % | 5.12% | 0.78% | 2.58% |
| Debt/Equity | 0.3 | 0.5 | – |
| Return on Equity | 11.8 | 3.6 | 27.7 |
| Current Price | $50.10 | $15.65 | $90.58 |
Considering dividend amount, Exxon Mobil Corporation (NYSE:XOM) offers a $2.18 annual dividend, while Total pays $1.93, and Petrobras delivers $0.12. Exxon’s payout ratio of 22.5% indicates strong potential of the company to increase the dividend in the near future. Total’s payout ratio is 40.9%, whereas the same indicator for Petroleo Brasileiro Petrobras SA (ADR) (NYSE:PBR)stands at 7.1%.
What does the future hold?
TOTAL S.A. (ADR) (NYSE:TOT) is about to start its Angolan liquefied natural gas project and the Kashagan field in Kazakhstan to increase its production growth from 2% to 3% this year. The company seems to be ready to expand its operations in Africa, Europe, and Asia.
