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Thanks for your comments all.
Boyo, I'd agree with you, the market only cares about delivering, but where is the market response to the deal with chevron earlier this year, where is the market response to the stonking ~7% dividend, where is the market response to the buy backs, the impressive company finances on the half year results. The company is delivering, the market is ignoring it.
Rangor: Is the market expecting zero growth for the next 4 years?
I believe this to be the case - G is only valued on what it delivers. Given its track record the market is not inclined to make assumptions. I also agree with Hasiba's points.
Don't let's forget, G is a stock currently worth less than 20p in the £1 to original investors. It's not a market star.
For interest, taken from Bloomberg's end-of-day resume:
The stock market is starting to look good again, according to JPMorgan strategists. They predict a rebound in September, saying more quantitative easing by the ECB, the chance of a second and bigger rate cut by the Fed and improving technical indicators are all catalysts that may lift equities out of the doldrums. Their view clashes with UBS, which just went underweight on stocks for the first time since the euro-area crisis.
SP low for other reasons too...
Uncertainty of the current political situation here , and in Iraq Kurdistan (low confidence and uncertainty in mostly corrupt politicians government there).
Not much demands of buyers of G
Sentiment and Trends for the market in general and G in particular.
Low valuations are in abundance in different sectors shares.
FTSE at its low
Oil price kept low
Future earnings expectations still in the air
Investors are keeping cash for expected market crash .
World economy is slowing down and expected oil demand is lower .
Trumpy trade wars!
But keeping G in my basket is still safe......SP is an emotional thing and more important for now is G paying big dividends and accumulating cash at this torrid times.
It will rise to its deserved value when above factors are rectified.
G has everything you want in a share.
Just imo.
Exactly!
Is the market expecting zero growth for the next 4 years?
Yielding about 6.7%, too.
Cheap as chips ... still!
Hi all,
I still can't understand why genel have such an incredibly low valuation. By my calcs the PE is about 3.3 and the EV/EBITDA Multiple is 1.5.
I just can't understand why the market is pricing the company this low. People talk about geo-politics discount, but the current discount seems more than extreme. At the current rate the company will hold more cash than its MCap within a couple of years. Within 4 years the company's net cash will be more than the MCap! It just does not make sense.
Ignore the gas, ignore all the other exciting things that may or may not come to fruition, and the company value is still low.
WTF?!
I'll start again: EV/EBITDA:
GKP: 3.27x
DNO: 2.5x
Genel: 1.8x
Cancel that, mixed EV/EBIT and EV/EBITDA
Sector median EV/EBIT: 11.79x
GKP: 3.27x
DNO: 2.5x
Genel: 1.8x
"One of the possible explanations why DNO is still underappreciated by the market is that a few investment funds shun fossil-fuel stocks, even despite their bargain-level valuation combined with high profitability and free cash flow abundance. This creates a perplexing case when a company virtually prints cash, but yet does not receive the attention it deserves from potential equity buyers who prioritize ESG matters over solid profits and cash flow."
https://seekingalpha.com/article/4286773-dnos-merits-still-lost-shuffle