On Sep 14, Zacks Investment Research upgraded TOTAL S.A. (TO:TOT) to a Zacks Rank #2 (Buy).
Why the Upgrade?
TOTAL has been witnessing rising earnings estimates on the back of strong second-quarter 2016 results, wherein this integrated oil & gas company reported a positive earnings surprise of 20.0%.
Management’s long-term plan is to increase production by an average of 5% per year between 2014 and 2019. Thanks to 20 major start-ups across the globe, five of which are scheduled for this year, the company now expects 2016 production to improve on a year-over-year basis. In fact, the company intends to boost production while reducing capital expenditure by 15%.
Meanwhile, TOTAL continues to make strategic acquisitions in high-potential areas and divest assets that are not in sync with its long-term objectives. On Jun 27, the company signed an agreement with Qatar Petroleum that gave it a 30% interest to operate the giant offshore Al-Shaheen oil field, which will help the company penetrate further into the Middle-east.
To cope with the sluggish commodity price environment, TOTAL has undertaken initiatives to lower its overall expenditure. The company has successfully cut operating expenses in accordance to its plans, and is even on track to exceed its cost saving target of $2.4 billion in 2016. In 2017, the company expects to save $3 billion. These cost savings initiatives will no doubt boost the company’s margins.
The Zacks Consensus Estimate for 2016 moved up 8.9% to $3.19 per share as 71% of the estimates were revised higher over the last 60 days. For 2017, 86% estimates were revised higher over the same time frame, lifting the Zacks Consensus Estimate by 8.8% to $4.22 per share.
Other Stocks on the Horizon
A few equally ranked stocks in the same sector include OMV Aktiengesellschaft OMVJF, Repsol (MC:REP), S.A. (OTC:REPYY) and Premier Oil plc (OTC:PMOIY) . You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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TOTAL FINA SA (TOT): Free Stock Analysis Report
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Original post
Zacks Investment Research