U.S. Markets open in 6 hrs 1 min

TOTAL S.A. (EPA:FP): Is It A Smart Long Term Opportunity?

Simply Wall St

Looking at TOTAL S.A.’s (EPA:FP) earnings update on 31 December 2018, analysts seem fairly confident, as a 25% increase in profits is expected in the upcoming year, relative to the past 5-year average growth rate of 2.3%. By 2020, we can expect TOTAL’s bottom line to reach US$14b, a jump from the current trailing-twelve-month of US$11b. I will provide a brief commentary around the figures and analyst expectations in the near term. For those interested in more of an analysis of the company, you can research its fundamentals here.

See our latest analysis for TOTAL

Exciting times ahead?

The view from 22 analysts over the next three years is one of positive sentiment. Given that it becomes hard to forecast far into the future, broker analysts tend to project ahead roughly three years. To understand the overall trajectory of FP’s earnings growth over these next fews years, I’ve fitted a line through these analyst earnings forecast to determine an annual growth rate from the slope.

ENXTPA:FP Past and Future Earnings, March 7th 2019

This results in an annual growth rate of 9.0% based on the most recent earnings level of US$11b to the final forecast of US$16b by 2022. EPS reaches $6.25 in the final year of forecast compared to the current $4.27 EPS today. With a current profit margin of 6.2%, this movement will result in a margin of 8.5% by 2022.

Next Steps:

Future outlook is only one aspect when you’re building an investment case for a stock. For TOTAL, I’ve put together three pertinent factors you should further examine:

  1. Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
  2. Valuation: What is TOTAL worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether TOTAL is currently mispriced by the market.
  3. Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of TOTAL? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.