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Here's Why You Should Hold on to TOTAL (TOT) Stock for Now

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Shares of TOTAL S.A. have outperformed the Zacks Integrated International Oil and Gas industry in the last 12 months. While the company’s shares rallied 19.1%, the industry gained 11.1%.

The company has one of the best production growth profiles among the oil super majors, characterized by an upstream portfolio with above industry-average exposure to the faster growing hydrocarbon producing regions of the world.

TOTAL’s long-term outlook is to increase upstream production by an average of 5% per year between 2014 and 2022. The company is geared to achieve its targeted production growth on the back of 13 major start-ups lined up from 2017 to 2019.
 



TOTAL continues to make strategic acquisitions and agreements with existing operators in high potential areas and divest assets that are not in sync with its long-term objectives. Its agreement to acquire the upstream liquefied natural gas assets of Engie for $1.49 billion and the deal to buy Maersk Oil & Gas A/S (Maersk Oil) for $7.45 billion will continue to expand its global operation.

The company is planning to cut costs to expand its margins. TOTAL aims to achieve savings of $3.6 billion in 2017 through its ongoing initiatives and has plans to save around $5 billion in 2020.

However, TOTAL’s global presence exposes it to competition from national and international oil and gas majors. It has to compete with the likes of ExxonMobil (XOM - Free Report) , Royal Dutch Shell, Chevron (CVX - Free Report) and BP p.l.c.(BP - Free Report) for acquiring assets and licenses for the exploration and production of oil and natural gas as well as for the sale of manufactured products based on crude and refined oil. An increase in competitive pressure from its peers could negatively impact sales, hurting TOTAL’s margins and market share in the global business.

The company’s Zacks Consensus Estimate for 2017 earnings per share moved up 1.5% in last 90 days. The company delivered positive surprises in last three quarters with an average surprise of 3.68%.

Zacks Rank

TOTAL currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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