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Analysts’ Favorite Integrated Energy Stocks: Here Are the Top 10

PART:
1 2 3 4 5 6 7 8 9 10 11
Part 3
Analysts’ Favorite Integrated Energy Stocks: Here Are the Top 10 PART 3 OF 11

Analyst Ratings for YPF: 2nd Most Loved Integrated Energy Stock

Analyst ratings for YPF

In the previous part of this series, we saw that Royal Dutch Shell (RDS.A) has the highest number of “buy” ratings among global integrated energy stocks. Now let’s look at analyst ratings for YPF (YPF), their second-best pick.

Analyst Ratings for YPF: 2nd Most Loved Integrated Energy Stock

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YPF is an integrated oil and gas company in Argentina. Its market cap (capitalization) of $8.0 billion is the lowest among the ten integrated energy stocks in this series. The analyst rating graph above shows that 11 (or 85.0%) of the 13 analysts covering YPF have rated it a “buy” in September 2017. Another two analysts have rated it a “hold.”

The high “buy” ratings for YPF could be due to the regulated nature of the oil and gas industry in Argentina. The company benefits from subsidies in the gas segment and regulated oil prices. However, now the economy seems to be changing, with a focus on progressive elimination of subsidies and a convergence of domestic oil prices to international crude oil prices.

YPF’s implied gain

YPF’s analyst ratings have improved in September 2017 over September 2016. During that period, YPF’s mean target price has risen 6.0%. Its mean price target of $28 per share implies a 37.0% rise from the current level, which is the highest among the stocks covered in this series. The gains were even higher earlier. The decline in implied gains is due to the steeper rise of 17.0% in YPF stock compared to the 6.0% rise in its mean target price in September 2017 over September 2016.

However, in the current quarter, since July 3, 2017, the stock has fallen 7.6%. The company’s dividend yield stands at 0.60%, which is lower than the integrated energy stocks in this series.

Valuations

YPF trades at a forward PE (price-to-earnings) multiple of 14.1x, which is below the average forward PE multiple of our ten integrated energy stocks at 22.8x. YPF also trades at 3.6x for its forward EV-to-EBITDA (enterprise value to earnings before interest, tax, depreciation, and amortization) multiple, which is below the peer average of 6.3x. One of the important factors impacting valuations could be the ongoing deregulation of the oil and gas industry in Argentina. Perhaps the markets are waiting to see the concrete impact of the deregulation on the company.

In the next part, we’ll look at analyst ratings for Suncor Energy (SU), the integrated energy company with the third-highest “buy” ratings.

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