How Energy Stocks’ Valuations Compare to Historical Averages
Integrated energy stocks’ valuations
In this part, we’ll look at integrated energy stocks’ EV to EBITDA compared to their three-year historical average. ExxonMobil (XOM), Chevron (CVX), Royal Dutch Shell (RDS.A), and BP (BP) are currently trading above their historical EV to EBITDA.
Chevron’s valuation multiple is the highest at 19.9x compared to peers. This multiple is also higher than its historical EV to EBITDA, which stands at 9.8x. XOM, RDS.A, and BP’s current EV to EBITDA stand at 18.9x, 13.0x, and 11.5x compared to historical multiples of 11.7x, 7.7x, and 7.1x, respectively.
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These leading integrated energy stocks trade at valuations above historical averages likely because of the rising oil and gas prices, which have instilled confidence in investors. Investors continue to hold on to the stocks despite the turbulent times the industry is facing due to volatile oil prices. For exposure to integrated energy stocks, you can consider the iShares Global Energy ETF (IXC), which has ~55% exposure to the sector.