FP-FRA - Embedded Expectations Analysis - 2018 10 04
TOTAL S.A. (FP:FRA) currently trades near recent averages relative to UAFRS-based (Uniform) Assets, with a 0.8x Uniform P/B. At these levels, the market has fairly muted expectations for the firm, while management is concerned about their liquidity profile and gearing, ability to manage working capital, and production levelsSpecifically, management may lack confidence in their ability to reduce their debt and maintain gearing below 20% while increasing their share buyback levels. Additionally, they may lack confidence in their ability to manage their working capital and balance sheet going forward, and to continue trading with less volatility compared to their peers. Finally, they may be concerned about their ability to sustain low organic breakeven levels, strong debt-adjusted cash flows, and increased production levels going forward
Total is an international integrated oil and gas company also active in solar and biomass energy sources. Co. engages all aspects of the petroleum industry, including Upstream operations (oil and gas exploration, development and production, and LNG (Liquefied Natural Gas)) and Downstream operations (refining, petrochemicals, specialty chemicals, marketing and marketing and trading and shipping of crude oil and petroleum products). In addition, Co. is engaged in the coal mining and power generation sectors. Co.'s worldwide operations are conducted through three business segments: Upstream, Refining & Chemicals, and Marketing & Services.
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- GAAP and IFRS have failed to provide rules for reliable financial statement reporting
- Stock analyst recommendations are not grounded in disciplined financial analysis
- Credit agencies have been set up to grossly fail in their responsibilities to investors and the public markets
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