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TOTAL S.A. (ADR) (TOT): Inexpensive Yet Overperforming

The financial performance of the company is still in a stable position despite the fact that gross profit margins decreased in the first quarter of 2013 by 11% relative to same period last year. Its long-term Debt to Equity ratio is at 44.44% which is relatively at par with the industry’s 45.38%. The dividend yield of 4.3% is 21% higher than the industry average of 3.562% indicating the company’s ability to pay high annual return value in conjunction to the current interest rates.

Data Source: Yahoo Finance

The Earnings yield (shown in the chart below) is also higher at 9.71% relative to other major players in the industry which includes Ecopetrol (EC) and Occidental Petroleum Corporation (NYSE:OXY) which garnered changes of 8.73% and 5.83%, respectively. This is another major positive for the company.

Recommendation

I would recommend buying TOTAL S.A. (ADR) (NYSE:TOT). Reasons cited for this include attractive valuation level as seen in its P/E which is well discounted in comparison to the industry average. Moreover, the company shows outstanding financial performance as seen in its high earnings yield and high revenue growth, which outweighs the fact that its revenue dropped by 9.73% in the first quarter of this year. The future outlook of the company looks promising as it continuously embarks on several modernization and innovative projects such as the Antwerp refining and Port Arthur shale gas which can boost its profit and position the company as one of the most competitive company in the industry.

Awais Iqbal has no position in any stocks mentioned. The Motley Fool recommends Total SA. (ADR). Awais is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

The article Total SA: Inexpensive yet Overperforming originally appeared on Fool.com and is written by Awais Iqbal.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

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