uploads///Hist Valuations

Energy Stocks’ Historical Averages in Focus

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Integrated energy stocks’ valuations

In this part, we’ll look at the integrated energy stocks’ EV-to-EBITDA[1. enterprise value to earnings before interest, tax, depreciation, and amortization] compared to their historical averages. In 2Q16, ExxonMobil (XOM), Chevron (CVX), and Royal Dutch Shell (RDS.A) traded at EV-to-EBITDA multiples above their historical averages. However, in 2Q16, BP (BP) traded at an EV-to-EBITDA multiple that was below its historical average.

XOM, CVX, and RDS.A trade at valuations above their historical averages. The majority of their investors are holding onto these stocks, despite the turmoil in the oil and gas industry.

On the other hand, BP (BP) has been struggling with oil spill charges and the volatile oil price environment. The Vanguard High Dividend Yield ETF (VYM) has an ~11% exposure to energy sector stocks.

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