Robert Haddad
Ashley Hughes
AmirAli Motamedi Masoudieh
ƒ
ƒ
ƒ
ƒ
ƒ
Composed of companies involved in the production and supply of energy 166 Energy Sector Stocks with >$1B Mkt Cap (non‐ADR)
39 “Energy Sector” Companies in S&P 500
11.02% of S&P 500 $1.124 Trillion in Market Cap in S&P 500 SIM Stocks / Our Stocks
ƒ
Oil & Gas Drilling
Noble Corp.
ƒ
Oil & Gas Equipment & Services
National Oilwell Varco Inc., Cameron Int’l, FMC Technologies
ƒ
Integrated Oil & Gas
Chevron, Murphy Oil
ƒ
Oil & Gas Exploration & Production
ƒ
Oil & Gas Refining & Marketing
ƒ
Oil & Gas Storage & Transportation
ƒ
Coal & Consumable Fuels
ƒ
Current & Forecasted Oil Production Capacity
ƒ
Current & Forecasted World Oil Demand
ƒ
Current &Forecasted GDP Predominantly From Industrial & Agricultural Output
ƒ
Current & Forecasted Level of World Population and Number of Cars
ƒ
Current Estimates of World Oil Reserves
ƒ
The level of Political, Economical and Social Stability in Oil Producing Countries
ƒ
OPEC Decisions
ƒ
The Current and Projected Level of Investment Requirements Infrastructural Components of The Energy Sector
ƒ
ƒ
ƒ
ƒ
ƒ
ƒ
ƒ
ƒ
We own Chevron Corporation(CVX), Noble Corporation(NE), National OilWell Varco(NOV)
CVX: 400 basis points
NE: 260 basis points
NOV: 330 basis points
Currently We have 9.9% of our portfolio in energy
As of August/13/2010 Energy was 11% of S&P500
Our Portfolio is under weight by 110 bp in energy with respect to S&P 500
Class Recommendation: Bring Energy In Line With S&P’s Energy Weight
ƒ
ƒ
ƒ
ƒ
ƒ
NOV incorporated in 1995
Sector: Energy
Industry: Oil & Gas Equipment & Services
Full Time Employees: 32,423
Line of Business: Designs, Construction & manufacturing of systems & components that are used in oil and gas drilling. Also provides oilfield services & supplies & distribution of related products. Also Provide supply chain integration services to upstream oil & gas industry world wide. ƒ
Business Segments: Rig Technology, Petroleum Services & Supplies, Distribution Services
ƒ
Competitors: MDR(McDermott International Inc), SII(Smith International,Inc.Comm), WFT(Weatherford International, Ltd)
ƒ
Rig Technology: design, manufactures, sells and services complete systems for the drilling, completion and servicing of oil & gas wells.
ƒ
Petroleum Services & Supplies: provides variety of consumable goods and services used to drill, complete, remediate and workover oil and gas wells and service pipelines, flowlines and other oilfiled tubular goods.
ƒ
Distribution Services: Provides maintenance, repair and operating supplies and spare parts to drill site and production location world wide.
ƒ
Stock Price: $40.84
ƒ
52 wK Range:$ 32.18‐$50.17
ƒ
Market Cap: 17.11B
ƒ
Beta: 1.48
ƒ
Avg Vol(3m):1,863,719
ƒ
EPS(ttm): 3.83
ƒ
Div & Yield: 0.40(1.00%)
ƒ
ƒ
ƒ
ƒ
ƒ
ƒ
ƒ
ƒ
ƒ
ƒ
ƒ
ƒ
ƒ
ƒ
ƒ
Level of activity in oil & gas industry(volatile)
Volatility of oil & gas OPEC power Level of production
Worldwide economic activity
National government political requirements
Development of alternate energy sources
Environmental regulation
Level of competition in industry
Maintaining aggressive growth strategy
Political, Economical instability in International markets
Currency restrictions, trade and economical sanctions
Foreign currency exchange rates
Compliance with federal, state and local laws
Potential environmental liability
National Oilwell Varco, Inc(NOV)
Consolidated Statement of Income
(mill $)
F‐Consensus
2012
F‐FYE
2012
F‐Consensus
2011
F‐FYE
2011
F‐Consensus
2010
F‐FYE
2010
FYE 2009 FYE
2008
FYE
2007
FYE
2006
FYE
2005
Sales
11,469.4 11,028.2 10,812.0 10,812 11,162 7,873.3 5,472.5 3,605.5 Services
2,015.5 1,938.0 1,900.0 1,900 2,269 1,915.7 1,553.3 1,039.0 12,712.0 12,712 13,431 9,789.0 7,025.8 4,644.5 New‐13,097
Total Revenue
New‐
11,897 New‐11,659 12,391 13,484.9 11,287.0 12,966.2 11,736.0 Cost of Revenue
Cost of Sales
8,002.2 7,694.4 7,543.5 7,297 7,784 5,675.3 4,230.4 2,905.1 Cost of Services
1,493.2 1,435.8 1,407.6 1,631 1,575 1,283.5 1,034.8 752.2 Total Cost
9,495.3 9,130.1 8,951.1 8,928 9,359 6,958.8 5,265.2 3,657.3 Gross Profit
3,989.5 3,836.1 3,760.9 3,784 4,072 2,830.2 1,760.6 987.2 Sellling general and adminstrative
1,253.0 1,322 1,154 785.8 641.6 478.7 7.9 31.7 Intangible Impairment
1,204.8 ‐
1,181.1 ‐
‐ 147 Operating Profit
2,736.6 2,631.3 2,579.7 2,315 Interest and financial cost
(56.2)
(54.1)
(53.0)
(53)
Interest Income
9.5 9.2 9.0 9 Equity income in uncosolidated affiliate
49.9 47.9 47.0 47 42 other income(expense), net
(116.7)
(112.2)
(110.0)
(110)
Income Before Income Taxes
2,623.1 2,522.2 2,472.7 2,208 Provision for Income Taxes
873.2 839.6 823.1 735 Net Income
1,749.9 1,682.6 1,649.6 1,473 Net Income attributable to noncontrolling interests
12.0 12.0 12.0 4 1,637.6 1,469 Net Income attributed to Company
Net Income attributed to Company Per Share:
Basic
Diluted
Weighted average shares outstanding:
1,737.9 New‐3.68
1,670.6 New‐3.28 3.59 4.18 4.17 3.17 2,918 2,044.4 1,111.1 476.8 (67)
(50.3)
(48.7)
(52.9)
45 52.6 18.1 4.9 23 (17.8)
(31.3)
1.2 2,961 2,028.9 1,049.2 430.0 993 675.8 355.7 138.9 1,968 1,353.1 693.5 291.1 16 16.0 9.5 4.2 1,952 1,337.1 684.0 286.9 New‐3.81 4.02 4.01 3.70 3.94 3.53 4.91
3.77
1.95
1.83
3.93 3.53 4.9
3.76
1.93
1.81
Basic
416.0 416.0 416.0 416 397
354.4
350.4
156.4
Diluted
417.0 417.0 417.0 417 399
355.4
353.6
158.3
National Oilwell Varco Inc
Terminal
Discount
Rate =
Amirali Motamedi Masoudieh
August/09/2010
Year
Revenue
E‐2010
E‐2011
Operating Margin
Interest and Other
Interest % of Sales
Taxes
Tax Rate
Net Income
% of Sales
Plus/(minus) Changes WC
% of Sales
Subtract Cap Ex
Capex % of sales
Free Cash Flow
PV of Future Free Cash Flow
NPV of terminal value
Projected Equity Value
Free Cash Flow Yield
Current P/E
Projected P/E
Current EV/EBITDA
E‐2015
14,294.0 6.0%
2,579.7 20.3%
2,631.3 20.3%
2,736.6 20.3%
2,858.8 20.0%
3,087.5 20.0%
3,303.6 20.0%
(107.0)
‐0.84%
(109.1)
‐0.84%
(113.5)
‐0.84%
(71.5)
‐0.50%
(77.2)
‐0.50%
823.1 33.29%
839.6 33.29%
873.2 33.29%
927.8 33.29%
1,682.6 2.00%
1,749.9 4.00%
315.7 2.48%
322.0 2.48%
(397.7)
‐3.13%
324.6 2.55%
E‐2016
E‐2018
E‐2019
E‐2020
19,672.9 5.5%
20,656.6 5.0%
21,689.4 5.0%
3,518.4 20.0%
3,729.5 20.0%
3,934.6 20.0%
4,131.3 20.0%
4,337.9 20.0%
(66.1)
‐0.40%
(61.6)
‐0.35%
(55.9)
‐0.30%
(39.3)
‐0.20%
(20.7)
‐0.10%
‐
0.00%
1,002.1 33.29%
1,077.7 33.29%
1,150.7 33.29%
1,222.8 33.29%
1,296.6 33.29%
1,368.4 33.29%
1,444.0 33.29%
1,859.5 6.26%
2,008.2 8.00%
2,159.8 7.55%
2,306.1 6.77%
2,450.7 6.27%
2,598.6 6.04%
2,742.3 5.53%
2,893.9 5.53%
334.8 2.48%
354.9 2.48%
383.3 2.48%
410.2 2.48%
436.8 2.48%
463.0 2.48%
488.5 2.48%
512.9 2.48%
538.6 2.48%
(109.8)
‐0.85%
(224.0)
‐1.66%
‐
0.00%
‐
0.00%
‐
0.00%
‐
0.00%
‐
0.00%
‐
0.00%
‐
0.00%
‐
0.00%
331.1 2.55%
344.4 2.55%
365.0 2.55%
394.2 2.55%
421.8 2.55%
449.3 2.55%
476.2 2.55%
502.4 2.55%
527.5 2.55%
553.9 2.55%
1,243.0 1,563.6 25.8%
1,516.4 ‐3.02%
1,849.4 21.96%
1,997.3 8.00%
2,148.2 7.55%
2,293.7 6.77%
2,437.5 6.27%
2,584.7 6.04%
2,727.7 5.53%
2,878.6 5.53%
1,095.1 10,666.6 8,830.6 19,497.2 7.26%
1,213.8 54.71%
45.29%
100.00%
1,037.1 1,114.4 1,060.4 1,004.8 945.3 885.1 826.9 768.8 714.9 10.37 10.17 9.78 11.82 5.26
11.59 5.16
11.14 4.96
1,649.6 417.3
Current Price
$ 41.00 Implied equity value/share
$ 46.72 Upside/(Downside) to DCF
13.96%
15,437.5 16,518.1 17,591.8 8.0%
7.0%
6.5%
5.0%
E‐2017
18,647.3 6.0%
Projected EV/EBITDA
Shares Outstanding
E‐2014
13,484.9 4.0%
% Growth
NPV of Cash Flows
E‐2013
12,966.2 2.0%
% Growth
Add Depreciation/Amort
E‐2012
12,712.0 % Growth
Operating Income
13.5%
Terminal FCF Growth =
Termina Value=
Free Cash Yield=
Termina P/E=
Terminal EV/EITDA=
35558.651
8.10%
12.29 6.91 Absolute Basis
P/Trailing E
P/Forward E
P/B
P/S
P/CF
High
106.7
32.9
8.6
3.5
23.0
Low
6.5
7.8
1.6
1.0
5.6
Median
27.8
21.3
4.6
2.0
13.2
Current
22.7
18.3
2.6
2.1
12.8
Relative to SP500
High
Low
Median
Current
P/Trailing E
3.9
0.58
1.5
1.5
P/Forward E
1.7
0.61
1.3
1.3
P/B
2.8
0.9
1.4
1.2
P/S
2.8
1.0
1.5
1.8
P/CF
1.6
0.8
1.2
1.4
Relative to Sector
High
Low
Median
Current
P/Trailing E
5.1
1.0
2.1
1.4
P/Forward E
2.3
0.7
1.6
1.6
P/B
2.5
1.0
1.6
1.3
P/S
3.2
1.2
1.9
2.1
P/CF
2.4
1.0
1.7
1.7
Relative to
Industry
P/Trailing E
P/Forward E
P/B
P/S
P/CF
High
Low
Median
Current
2.9
1.2
1.1
1.1
6.4
0.42
0.43
0.4
0.5
0.6
0.90
0.80
0.5
0.8
1.4
0.42
0.59
0.4
0.6
0.6
Relative to S&P
500
P/Trailing E
P/Forward E
P/B
P/S
P/CF
High
Low
Median
Current
10.6
0.41
0.38
0.5
0.6
0.5
1.2
1.0
0.8
1.1
1.7
0.64
0.80
0.5
1.1
0.8
2.1
1.6
2.5
7.4
Absolute
Valuation
High
Low
Median
Current
A.
P/Forward E
P/S
P/B
P/EBITDA
P/CF
B.
50.8
3.1
5.1
45.78
116.8
C.
5.1
0.8
0.8
2.77
3.9
D.
17.1
1.5
2.4
12.21
17.9
E.
12.4
1.3
1.1
5.23
7.3
#Your
Target
Multiple
F.
13
1.6
1.5
8
9
*Your
Target E,
S, B,
etc/Share
G.
3.93
30.48
34.53
5.2
5.1
Your
Target
Price
(F x G)
H.
51.09
48.77
51.80
41.6
45.3
ƒ
ƒ
ƒ
ƒ
ƒ
ƒ
Average Price of Free Cash Flow+ P/E Multiples Came to be $47.56
My Final Conservative Estimate is $46.00
With Current Price at $41.00 that would translate to 12% gain
2011 US economy is going to be slightly better than 2010 but the world economy(especially emerging markets) are going to experience stronger growth compare to 2010 therefore the demand for energy will be higher in 2011. In long term the company will capture good portion of growth in energy demand especially in developing & emerging markets.
Oil Prices will stay at high $70s pb by the end of 2010 & will be around low $80s pb in early 2011
Final Recommendation HOLD NOV. ƒ
ƒ
ƒ
Sector: Energy
Industry: Oil and Gas Equipment / Services
What they do:
‐Drilling & Production Systems, Valves & Measurements, Compression Systems
ƒ
ƒ
ƒ
Price: $38.90
Target: $44.00
Upside: 13.1%
‐2/3 of business is non‐US
Relative to
Industry
P/Trailing E
P/Forward E
P/B
P/S
P/CF
High
Relative to S&P
500
P/Trailing E
P/Forward E
P/B
P/S
P/CF
High
Absolute
Valuation
A.
P/Forward E
P/S
P/B
P/EBITDA
P/CF
Low
1.2
1.2
1.3
1.3
1.8
0.55
0.67
0.4
0.6
0.8
B.
38.3
2.8
5.5
30.42
29.8
Low
C.
7.3
0.7
1.8
3.98
5.9
D.
20.4
1.8
2.8
13.92
16.6
0.75
0.85
0.9
0.8
1.0
Median
0.66
0.56
0.6
0.9
0.8
Median
Current
1.0
0.96
0.8
0.8
1.3
Low
2.5
1.8
2.1
2.0
2.3
High
Median
Current
E.
15.4
1.7
2.2
9.24
12.5
Current
1.5
1.2
1.0
1.2
1.5
#Your
Target
Multiple
F.
14.9
1.8
2.8
13.92
16.6
*Your
Target
E, S, B,
etc/Sha
re
G.
2.83
25.37
17.24
4.10
3.03
1.1
1.1
1.1
1.5
1.4
Your
Target
Price
(F x G)
H.
42.17
45.67
48.27
57.07
50.30
CAM DCF Valuation
Cameron Intl (CAM)
Year
Revenue
2011E
6,607,405
2012E
7,268,145
% Growth
Operating Income
10.0%
1,091,930
1,259,268
Operating Margin
16.5%
Interest and Other
(83,017)
Interest % of Sales
Taxes
272,680
317,628
736,232
27.0%
857,590
% Growth
198,083
% of Sales
Plus/(minus) Changes WC
NPV of terminal value
Projected Equity Value
341,111
885,571
27.0%
920,994
1,530,301
16.0%
(106,351)
-1.2%
354,755
27.0%
1,591,513
(110,605)
27.0%
1,655,174
(115,029)
16.0%
(119,630)
-1.2%
399,052
27.0%
1,035,993
4.0%
16.0%
-1.2%
383,703
996,147
4.0%
16.0%
-1.2%
368,946
957,834
4.0%
-1.2%
415,014
27.0%
1,077,433
27.0%
1,120,530
2.0%
0.6%
4.0%
4.0%
4.0%
4.0%
4.0%
4.0%
217,891
226,766
243,698
261,622
280,589
300,656
321,878
344,318
363,064
377,587
3.0%
3.0%
3.1%
3.2%
3.3%
3.4%
3.5%
3.6%
3.7%
3.7%
(22,677)
(23,584)
(24,527)
(25,508)
(26,528)
(27,590)
(28,693)
(29,841)
(31,035)
-0.5%
-0.4%
-0.3%
-0.3%
-0.3%
-0.3%
-0.3%
-0.3%
-0.3%
-0.3%
-0.3%
271,728
313,437
325,031
330,171
335,203
340,108
344,870
349,468
353,882
363,064
377,587
4.1%
4.3%
4.3%
4.2%
4.1%
4.0%
3.9%
3.8%
3.7%
3.7%
3.7%
626,547
732,971
741,946
770,137
787,463
835,967
887,092
940,968
997,736
1,047,592
1,089,496
17.0%
1.2%
3.8%
2.2%
6.2%
6.1%
6.1%
6.0%
5.0%
4.0%
Terminal Value
16,186,795
Free Cash Yield
6.73%
Terminal P/E
14.4
4,994,141
47%
5,700,738
10,694,879
53%
100%
6.47%
13.2
14.5
11.3
12.5
11.2
12.4
Current EV/EBITDA
Projected EV/EBITDA
7.2
8.0
6.3
7.0
6.2
6.9
249,000
$
$
880,194
(102,260)
-1.2%
27.0%
1,471,444
16.0%
2021E
10,344,837
0.6%
Current P/E
Projected P/E
Current Price
Implied equity value/share
Upside/(Downside) to DCF
(98,327)
4.0%
2020E
9,946,959
(29,073)
Free Cash Flow Yield
Shares Outstanding
27.0%
1,414,850
16.0%
-1.2%
327,991
4.0%
2019E
9,564,384
16.5%
% Growth
NPV of Cash Flows
27.0%
1,360,432
2018E
9,196,523
4.0%
16.0%
(94,545)
2017E
8,842,810
3.0%
Capex % of sales
Free Cash Flow
4.0%
-1.2%
326,000
2016E
8,502,702
(36,040)
% of Sales
Subtract Cap Ex
2015E
1,308,108
(90,909)
862,888
4.0%
16.5%
-1.2%
319,590
Terminal FCF
Growth =
8,175,675
1,297,102
(87,412)
11.0%
4.0%
16.8%
-1.2%
27.0%
Add Depreciation/Amort
1,269,890
(84,050)
2014E
7,861,226
4.0%
17.3%
-1.3%
Tax Rate
Net Income
2013E
7,558,871
Terminal
Discount Rate
=
38.90
42.95
10.4%
Terminal
EV/EBITDA
7.8
Terminal Discount Rate
10.41%
8%
9%
10%
11%
12%
Terminal
2%
29%
10%
-4%
-15%
-23%
FCF Growth
3%
55%
29%
10%
-4%
-15%
4%
95%
55%
29%
10%
-4%
5%
161%
95%
55%
29%
10%
6%
292%
161%
95%
55%
29%
DCF Valuation Target Price: $43.00
ƒ
ƒ
Price Target: $44.00, Upside 13.1%
Do not buy Cameron Int’l (CAM)
ƒ Other stocks have more upside
ƒ Gulf Oil Spill Litigation / Risk / Regulation in offshore drilling
ƒ Since growth company and concentrated internationally in emerging markets, may follow stock next quarter.
ƒ
ƒ
ƒ
ƒ
ƒ
FTI incorporated in 2000
Sector: Energy
Industry: Oil & Gas Equipment & Services
Full Time Employees: 10,400 (2009)
Line of Business: Subsea production and processing systems , Surface wellhead systems , Fluid control equipment , Measurement solutions, Marine loading systems
ƒ
Business Segments: The Company operates in two business segments: Energy Production Systems and Energy Processing Systems.
ƒ
Competitors: Baker Hughes Incorporated, Cameron International Corporation, & Vetco Gray Inc.
ƒ
ƒ
•
Energy Production Systems—designs and manufactures systems and provides services used by oil and gas companies involved in land and offshore, particularly deepwater, exploration and production of crude oil and gas.
•
Energy Processing Systems—designs, manufactures and supplies technologically advanced high pressure valves and fittings for oilfield service customers; also manufactures and supplies liquid and gas measurement and transportation equipment and systems to customers involved in the production, transportation and processing of crude oil, natural gas and petroleum‐based refined products.
Pg 74 SEC 10k—won’t paste/
ƒ
Stock Price: $63.08
ƒ
52 wK Range:$ 42.58‐76.54
ƒ
Market Cap: 7.67B
ƒ
Beta: 1.29
ƒ
Avg Vol(1.7m):366,357.00
ƒ
EPS(ttm): 3.12
ƒ
Projects In:
Africa:
Asia Pacific: Australia: Europe:
Angola
Equitorial Guinea
Ghana
Ivory Coast Libya Mauritania
Nigeria
Republic of Congo South Africa
Vietnam Apache East Spar Ireland
Malaysia Woodside Angel Italy
China Woodside Eco Yodel Norway
Indonesia Woodside Enfield UK
Woodside Pluto North America:
Woodside PoG
US
Woodside Vincent Canada
South America:
Brazil
Trinidad and Tobago
ƒ
Industry Related:
9
Demand for the systems and services provided by FTI depends on oil and gas industry activity and expenditure levels, which are directly affected by trends in the demand for and price of crude oil and natural gas.
The industries in which FTI operates or have operated in expose them to potential liabilities arising out of the installation or use of their systems that could adversely affect their financial condition.
FTI customers are undergoing continuing consolidation in their industries that may impact their results of operations.
FTI’s operations and the industries in which they operate are subject to a variety of U.S. and international laws and regulations that may increase their costs, limit the demand for their products and services or restrict their operations.
9
9
9
ƒ
Company Related:
9
Disruptions in the political, regulatory, economic and social conditions of the foreign countries in which we conduct business could adversely affect our business or results of operations.
ƒ
ƒ
ƒ
ƒ
ƒ
ƒ
ƒ
ƒ
foreign currency fluctuations or currency restrictions;
fluctuations in the interest rate component of forward foreign currency rates;
nationalization and expropriation;
potentially burdensome taxation;
inflationary and recessionary markets, including capital and equity markets;
civil unrest, labor issues, political instability, terrorist attacks, military activity and wars;
supply disruptions in key oil producing countries;
ability of the Organization of Petroleum Exporting Countries (OPEC) to set and maintain production levels and pricing;
FTI
GAAP
(in mills)
Revenue
Costs and expenses:
Cost of sales
Gross Margin
Good Will Impairment
Selling, general and administrative expense
Research and development expense
Total costs and expenses
Operating Income
Other expense, net
Minority Interests
Income before net interest expense and income taxes
Net interest expense
Interest Income
Income from continuing operations before income taxes
Provision for income taxes
5232.00
4743.00 4228.00
FY
FY
FY
FY
FY
FY
FY
FY
FY
2012E
2011E
2010E
1Q2010
2009
2008
2007
2006
2005
2004
5336.17
4764.44 4625.67
1050.30
4405.40
4550.90
3648.90
3790.70
3139.30
2535.80
4215.58
3763.91 3654.28
776.00
3434.50
3623.10
2921.90
3026.40
2541.50
2028.20
1120.60
1000.53
971.39
274.30
970.90
927.80
727.00
764.30
597.80
507.60
6.50
517.61
485.97
481.07
103.20
389.50
351.70
310.60
410.40
361.30
329.20
75.77
64.32
58.75
14.20
51.30
45.30
40.80
49.90
48.10
46.20
593.38
550.29
539.82
893.40
3875.30
4020.10
3273.30
3486.70
2950.90
2410.10
527.21
450.24
431.58
2.67
2.38
2.31
‐619.10 ‐2904.40 ‐3092.30 ‐2546.30
‐5.30
‐2.70
‐23.00
29.90
529.88
‐13.87
452.62
‐12.39
433.89
‐12.03
151.60
‐2.30
516.01
154.80
440.23
132.07
421.86
126.56
149.30
49.90
527.40
‐11.90
2.40
517.90
155.10
507.80
‐8.10
6.60
506.30
152.00
405.50
‐16.10
6.80
396.20
134.50
99.40
362.80
0.50
354.30
8.40
261.70
42.20
295.30
‐1.39
293.91
99.40
‐0.40
99.00
363.30
‐1.50
361.80
362.70
‐1.40
361.30
303.90
‐1.10
302.80
2.39
0.81
2.91
1.89
0.33
2.31
‐2722.40
‐2353.10
‐1902.50
1.20
2.50
302.70
‐11.80
5.10
296.00
84.50
29.60
3.50
214.50
‐9.00
3.50
209.00
77.50
‐8.00
0.10
125.00
‐8.30
1.40
118.10
26.50
211.50
30.00
34.80
64.80
276.30
131.50
‐25.40
91.60
25.10
‐25.40
106.10
25.10
116.70
276.30
106.10
116.70
3.09
0.94
4.03
1.91
‐0.37
1.54
1.36
0.37
1.73
Income from continuing operations
Discontinued operations, net of income taxes
Gain on disposition of discontinued
Income (loss) from discontinued operations
Net income
Less: net income attributable to noncontrolling interests
Net income attributable to FMC Technologies, Inc.
Basic earnings per share attributable to FMC Technologies, Inc. (Note 2):
Income from continuing operations
Loss from discontinued operations
Basic earnings per share
Consensus
Diluted earnings per share attributable to FMC Technologies, Inc. (Note 2):
Income from continuing operations
Income from discontinued operations
Diluted earnings per share
Weighted average shares outstanding (Note 2):
Basic
Diluted
Net income attributable to FMC Technologies, Inc.:
Income from continuing operations
Income from discontinued operations, net of income taxes
Net income attributable to FMC Technologies, Inc.
Cash and Equiv
Accts Receivable
% of Sales
Inventories
I/S
Accounts Payable
I/AP
Chg in WC
Sales Growth
Sequential
YoY
Gross Margin
Chg YoY
SG&A to sales
Chg Yoy
R&D to sales
Chg Yoy
Operating Margin
Chg Yoy
Tax Rate
other expense(net) to sales
Chg YoY
Interest Expense to Sales
Income attributable to noncontrolling interests/sales
361.21
308.16
295.30
361.21
‐1.60
359.61
308.16
‐1.43
306.73
2.89
2.47
2.89
3.75
2.47
3.18
2.86
2.45
2.86
2.45
124.50
125.70
124.00
125.20
— 0.81
2.91
2.76
0.07
2.83
0.80
— 2.39
2.85
— 2.36
2.36
0.80
2.87
0.01
2.88
2.72
0.06
2.78
1.95
0.31
2.26
3.01
0.93
3.94
1.86
‐0.36
1.50
1.32
0.36
1.68
123.10
124.40
122.50
123.80
124.30
125.70
127.80
129.70
131.30
133.80
68.50
70.20
69.00
70.80
67.60
69.30
99.00
361.30
352.90
260.60
276.30
106.10
116.70
99.00
369.00
918.20
87.42%
544.40
0.52
292.90
1.86
361.80
460.70
879.20
19.96%
591.80
0.13
343.90
1.72
361.30
340.10
996.10
21.89%
559.30
0.12
439.80
1.27
302.80
129.50
775.70
21.26%
533.20
0.15
405.60
1.31
276.30
79.50
898.10
23.69%
584.40
0.15
420.40
1.39
106.10
152.90
711.40
22.66%
441.10
0.14
358.60
1.23
116.70
124.10
671.70
26.49%
316.30
0.12
368.80
0.86
— 359.61
306.73
359.61
306.73
293.91
293.91
1013.87
19.00%
480.26
0.09
300.16
1.60
47.82
1000.53
21.00%
571.73
0.12
330.48
1.73
‐107.13
925.13
20.00%
508.82
0.11
299.31
1.70
‐7.55
12.00%
21.00%
0.00%
9.70%
‐0.50%
1.42%
0.07%
‐52.00%
‐3.00%
30.00%
0.05%
10.00%
3.00%
21.00%
0.00%
10.20%
‐0.20%
1.35%
0.08%
‐55.00%
‐4.00%
30.00%
0.05%
0.00%
5.00%
21.00%
‐1.04%
10.40%
1.56%
1.27%
0.11%
‐59.00%
‐6.93%
30.00%
0.05%
‐10.00%
#REF!
#REF!
26.12%
#REF!
9.83%
#REF!
1.35%
#REF!
‐58.95%
#REF!
33.42%
‐0.50%
#REF!
‐3.20%
22.04%
1.65%
8.84%
1.11%
1.16%
0.17%
‐65.93%
2.02%
29.95%
‐0.06%
0.44%
24.72%
20.39%
0.46%
7.73%
‐0.78%
1.00%
‐0.12%
‐67.95%
1.83%
30.02%
‐0.51%
1.32%
‐3.74%
19.92%
‐0.24%
8.51%
‐2.31%
1.12%
‐0.20%
‐69.78%
2.04%
33.95%
0.82%
0.79%
20.75%
20.16%
1.12%
10.83%
‐0.68%
1.32%
‐0.22%
‐71.82%
3.14%
28.55%
0.03%
‐0.91%
23.80%
19.04%
‐0.97%
11.51%
‐1.47%
1.53%
‐0.29%
‐74.96%
0.07%
37.08%
0.94%
‐0.26%
‐0.03%
‐0.26%
‐0.03%
‐0.26%
‐0.03%
‐0.22%
‐0.04%
‐0.27%
‐0.03%
‐0.18%
‐0.03%
‐0.44%
‐0.03%
‐0.31%
0.00%
‐0.29%
0.00%
— 20.02%
12.98%
1.82%
‐75.03%
22.44%
‐0.33%
0.00%
ƒ
Upside 9.2%‐‐‐Hold FMC Technologies
Demand for energy will increase with economic recovery, further growth in emerging market, expected reduction of energy sector systematic risk, still relatively cheap.
However, risk of regulation and consolidation applies. ƒ
Sector: Energy
ƒ
Industry: Oil and Gas Integrated – very diversified
ƒ
Mkt Cap: $155.6 Billion (9th Largest on S&P 500)
ƒ
Current Price: $77.40
ƒ
Target Price: $90
ƒ
Upside: 16.3%
ƒ
Current Dividend Yield: 3.72% ƒ
Diversified Business:
ƒ Fully integrated petroleum operations, chemicals operations, mining operations, power generation and energy services
ƒ Exploration and production of natural gas and crude oil
ƒ Refineries Located Worldwide
ƒ Transportation and Storage via oil tankers and pipelines
Relative to
Industry
P/Trailing E
P/Forward E
P/B
P/S
P/CF
High
Relative to S&P
500
P/Trailing E
P/Forward E
P/B
P/S
P/CF
High
Absolute
Valuation
A.
P/Forward E
P/S
P/B
P/EBITDA
P/CF
Low
.99
1.3
1.2
1.4
1.3
.69
.59
.7
.6
.5
B.
24.1
1.5
3.2
8.06
10.9
Low
C.
5.6
.4
1.4
2.37
3.8
Median
.45
.40
.6
.4
.4
Median
D.
10.8
.8
2.4
4.65
7.0
Current
.91
.89
.8
.9
1.0
Low
1.0
1.1
1.1
.9
.8
High
Median
.70
.87
.9
1.0
.8
Current
.59
.65
.8
.6
.6
Current
E.
8.4
.8
1.6
3.78
5.3
#Your
Target
Multiple
F.
10.8
.8
2.4
4.65
7.0
.62
.62
.8
.7
.6
*Your
Target
E, S, B,
etc/Sha
re
G.
9.21
97.82
42
20.4
14.45
Your
Target
Price
(F x G)
H.
99.46
78.26
100.8
94.86
101.15
Year
Revenue
% Growth
EBT
EBT Margin
2010E
2011E
2012E
2013E
2014E
2015E
2016E
2017E
2018E
2019E
2020E
202,847 243,859 270,218 294,538 318,101 340,368 360,790 378,829 397,771 413,682
20.2% 10.8%
9.0%
8.0%
7.0%
6.0%
5.0%
5.0%
4.0%
430,229
4.0%
26,370
13.0%
31,702
13.0%
33,777
12.5%
35,345
12.0%
38,172
12.0%
40,844
12.0%
43,295
12.0%
45,460
12.0%
47,732
12.0%
49,642
12.0%
51,627
12.0%
101
0.1%
244
0.1%
270
0.1%
295
0.1%
318
0.1%
340
0.1%
361
0.1%
379
0.1%
398
0.1%
414
0.1%
430
0.1%
Taxes
Tax Rate
11,118
42.0%
13,417
42.0%
14,300
42.0%
14,968
42.0%
16,166
42.0%
17,297
42.0%
18,335
42.0%
19,252
42.0%
20,215
42.0%
21,023
42.0%
21,864
42.0%
Net Income
% Growth
15,353
18,528
20.7%
19,748
6.6%
20,671
4.7%
22,324
8.0%
23,887
7.0%
25,320
6.0%
26,586
5.0%
27,916
5.0%
29,032
4.0%
30,193
4.0%
Add Depreciation/Amort
% of Sales
Plus/(minus) Changes
WC
% of Sales
Subtract Cap Ex
Capex % of sales
12,171
6.0%
12,193
5.0%
12,160
4.5%
11,782
4.0%
12,724
4.0%
13,615
4.0%
14,432
4.0%
15,153
4.0%
15,911
4.0%
16,547
4.0%
17,209
4.0%
(972) (1,050) (1,123) (1,191) (1,250) (1,313) (1,365)
-0.3% -0.3% -0.3% -0.3% -0.3% -0.3% -0.3%
20,618 22,267 20,422 18,039 15,153 15,911 16,547
7.0%
7.0%
6.0%
5.0%
4.0%
4.0%
4.0%
(1,420)
-0.3%
17,209
4.0%
10,863
2.9%
28,774
4.0%
Interest
Interest % of Sales
Free Cash Flow
% Growth
(1,623) (1,463) (1,081)
-0.8% -0.6% -0.4%
20,285 19,509 20,266
10.0%
8.0%
7.5%
5,617
9,749
73.6%
10,560
8.3%
11,732
8.0%
15,956
36.0%
20,522
28.6%
25,336
23.5%
26,603
5.0%
27,667
4.0%
Terminal Discount Rate
8729.7%
12.0%
12.5%
13.0%
13.5%
14.0%
14.5%
Growth
2.0%
$93.53
$88.16
$83.31
$78.90
$74.88
$71.20
Rate
3.0%
$99.27
$93.14
$87.65
$82.70
$78.22
$74.15
4.0%
$106.45
$99.29
$92.95
$87.30
$82.23
$77.66
5.0%
$115.68
$107.08
$99.58
$92.98
$87.13
$81.91
Final Target Price: $90
Upside: 16.3%
Recommendation: Hold
Final price target based 2/3 on DCF and 1/3 on absolute valuations.
ƒ
ƒ
ƒ
ƒ
ƒ
ƒ
ƒ
ƒ
Noble Corporation Was Founded in 1921 based on Baar, Switzerland
Sector: Energy
Industry: Oil & Gas Drilling & Exploration
Mkt Cap: $8.29B
52Wk Range: $26.23‐$45.60
Current Price: $32.60
Target Price: $35.22
Upside: 8%
Noble is one of the leading offshore drilling contractors for oil & gas industry.
ƒ Noble has a fleet size of 62 mobile offshore drilling units located worldwide
ƒ The geographical scope includes: Middle East, India, Mexico, Nothr See, Brazil, West Africa
ƒ
Stock Valuation
Absolute Valuation
A.
P/Forward E
P/S
P/B
P/EBITDA
P/CF
Relative to Industry
P/Trailing E
P/Forward E
P/B
P/S
P/CF
High
1.3
1.1
2.0
1.7
1.5
Low
0.45
0.47
0.8
0.7
0.6
Median
0.80
0.82
1.2
1.3
1.1
Current
0.60
0.66
1.0
1.6
0.8
Relative to S&P 500
High
Low
Median
Current
P/Trailing E
P/Forward E
P/B
P/S
P/CF
2.9
1.7
1.5
5.5
2.4
0.31
0.25
0.5
1.8
0.4
1.0
0.74
0.9
3.5
1.2
0.39
0.59
0.6
2.2
0.5
High
Low
B.
30.5
9.4
4.7
26.68
35.0
Median
C.
3.3
1.8
1.1
2.58
3.1
Current
D.
15.1
5.1
2.8
11.08
13.9
#Your Target Multiple
E.
8.0
2.5
1.2
3.96
4.5
*Your Target E, S, B, etc/Share
F.
7
3
1.5
5
6
Your Target Price (F x G)
G.
6.9
11.9
25
8
7.5
H.
48.3
35.7
37.5
40
45
Noble Corporation
Terminal
Discount
Rate =
Terminal FCF
Growth =
Amirali Motamedi Masoudieh
August/15/2010
Year
Revenue
% Growth
E‐2010
E‐2011
E‐2012
E‐2013
E‐2014
E‐2015
E‐2016
14.0%
5.0%
E‐2017
E‐2018
E‐2019
E‐2020
3,107.0 3,533.0 3,696.0 4,250.4 4,803.0 5,331.3 5,811.1 6,276.0 6,715.3 7,118.2 7,474.1 13.7%
4.6%
15.0%
13.0%
11.0%
9.0%
8.0%
7.0%
6.0%
5.0%
Operating Margin
1,553.5 1,766.5 1,848.0 2,125.2 2,401.5 2,665.6 2,905.5 3,138.0 3,357.6 3,559.1 3,737.1 50.0%
50.0%
50.0%
50.0%
50.0%
50.0%
50.0%
50.0%
50.0%
50.0%
50.0%
Interest and Other
‐
Operating Income
Interest % of Sales
Taxes
Tax Rate
Net Income
% Growth
Add Depreciation/Amort
% of Sales
Plus/(minus) Changes WC
% of Sales
Subtract Cap Ex
Capex % of sales
Free Cash Flow
% Growth
‐
0.00%
‐
0.00%
‐
0.00%
‐
0.00%
‐
0.00%
‐
0.00%
‐
0.00%
‐
0.00%
‐
0.00%
‐
0.00%
0.00%
310.7 353.3 369.6 425.0 480.3 533.1 581.1 627.6 671.5 711.8 747.4 20.00% 20.00% 20.00% 20.00% 20.00% 20.00% 20.00% 20.00% 20.00% 20.00% 20.00%
1,242.8 1,413.2 1,478.4 1,700.2 1,921.2 2,132.5 2,324.4 2,510.4 2,686.1 2,847.3 2,989.7 13.71%
4.61% 15.00% 13.00% 11.00%
9.00%
8.00%
7.00%
6.00%
5.00%
310.7 353.3 369.6 425.0 480.3 533.1 581.1 627.6 671.5 711.8 747.4 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00%
(93.2)
(106.0) (110.9) (127.5) (144.1) (159.9) (174.3) (188.3) (201.5) (213.5) (224.2)
‐3.00%
‐3.00% ‐3.00% ‐3.00% ‐3.00% ‐3.00% ‐3.00% ‐3.00% ‐3.00% ‐3.00% ‐3.00%
994.2 1,130.6 1,182.7 1,147.6 1,200.7 1,226.2 1,220.3 1,129.7 1,007.3 711.8 2,391.7 32.00% 32.00% 32.00% 27.00% 25.00% 23.00% 21.00% 18.00% 15.00% 10.00% 32.00%
466.1 530.0 554.4 850.1 1,056.6 1,279.5 1,510.9 1,820.0 2,148.9 2,633.7 1,121.1 13.7%
4.61% 53.33% 24.30% 21.09% 18.08% 20.46% 18.07% 22.56% ‐57.43%
Terminal GrowthRate
Terminal Discount Rate
13% 13.50%
14% 14.50% 15.00%
3%
6%
1%
‐4%
‐8%
‐12%
4%
11%
5%
‐1%
‐5%
‐10%
5%
16%
9%
3%
‐2%
‐7%
6%
23%
15%
8%
2%
‐3%
Current Prices: $32.60
Target Price: with 80% weight on DCF & 20% weight on the average of multiples the target price ends up being: $35.228
ƒ Upside: 8.0%
ƒ Recommended Action to take: SELL
ƒ
ƒ
ƒ
Murphy Oil Corporation was Founded in 1950 & is Based in El Dorado, Arkansas
ƒ
Sector: Energy
ƒ
Industry: Oil & Gas‐Integrated
ƒ
Fulltime Employees: 3,261
ƒ
Line of Business: Engages in Exploration, Production of Oil & Gas Properties Worldwide. Involves in refining & marketing crude oil & other feedstock into petroleum products. ƒ
Competitors: BP(British Petroleum), XOM(Exxon Mobil), RDS(Royal Dutch Shell)
ƒ
Stock Price: $55.55
ƒ
52 Wk Range: $65.12‐$48.14
ƒ
Market Cap: $10.63B
ƒ
Beta: 1.06
ƒ
Avg Volume: 2,033,177
ƒ
EPS: 4.23
ƒ
Dividend & Yield: 1.00(1.7%)
ƒ
Murphy’s exploration and production activities are subdivided into six geographic segments, including the United States, Canada, Malaysia, the United Kingdom, Republic of the Congo and all other countries. Murphy’s refining and marketing activities are subdivided into geographic segments for North America and United Kingdom. Murphy exited the gasoline retailing business in Canada during 2007, but the relatively insignificant historical results for the Canadian operations have been combined with U.S. refining and marketing operations in the North American segment.
ƒ
Level of industrial competition and therefore profitability, growth & management implications
ƒ
The level of replacement of oil & gas reserves
ƒ
Accuracy of Murphy’s proved reserves
ƒ
Volatility of global oil, natural gas & petroleum products
ƒ
Exploration & drilling operational performance ƒ
Availability of capital financing
ƒ
Operational hazards
ƒ
Political stability of international regions that company operates in
Murphy OIL Terminal
Discount
Rate =
Terminal FCF Growth
=
Amirali Motamedi Masoudieh
14.5%
August/10/2010
Year
E‐2010
E‐2011
Revenue
22,880.0 28,024.0 32,826.0 37,093.4 41,173.7 44,879.3 48,020.8 50,902.1 53,447.2 55,585.1 57,808.5 22.5%
17.1%
13.0%
11.0%
9.0%
7.0%
6.0%
5.0%
4.0%
4.0%
% Growth
Operating Income
Operating Margin
Interest and Other
Interest % of Sales
E‐2012
E‐2013
E‐2014
E‐2015
E‐2016
4.0%
E‐2017
E‐2018
E‐2019
E‐2020
3,660.8 4,483.8 5,252.2 5,934.9 6,587.8 7,180.7 7,683.3 8,144.3 8,551.5 8,893.6 9,249.4 16.0%
16.0%
16.0%
16.0%
16.0%
16.0%
16.0%
16.0%
16.0%
16.0%
16.0%
1,830.4 2,241.9 2,626.1 2,967.5 3,293.9 3,141.5 2,881.2 2,545.1 1,603.4 1,111.7 1,156.2 8.00%
8.00%
8.00%
8.00%
8.00%
7.00%
6.00%
5.00%
3.00%
2.00%
2.00%
Tax Rate
695.6 851.9 997.9 1,127.6 1,251.7 1,534.9 1,824.8 2,127.7 2,640.3 2,957.1 3,075.4 38.00%
38.00%
38.00% 38.00% 38.00% 38.00% 38.00% 38.00% 38.00%
38.00% 38.00%
Net Income
1,134.8 Taxes
% Growth
Add Depreciation/Amort
% of Sales
Plus/(minus) Changes WC
% of Sales
Subtract Cap Ex
Capex % of sales
Free Cash Flow
1,390.0 1,628.2 1,839.8 2,042.2 2,504.3 2,977.3 3,471.5 4,307.8 4,824.8 5,017.8 22.48%
17.14% 13.00% 11.00% 22.63% 18.89% 16.60% 24.09%
12.00%
4.00%
686.4 840.7 984.8 1,112.8 1,235.2 1,346.4 1,440.6 1,527.1 1,603.4 1,667.6 1,734.3 3.00%
3.00%
3.00%
3.00%
3.00%
3.00%
3.00%
3.00%
3.00%
3.00%
3.00%
(82.4)
(100.9)
(118.2)
(111.3)
(123.5)
(112.2)
(120.1) (101.8)
(106.9)
(55.6)
(57.8)
‐0.36%
‐0.36%
‐0.36%
‐0.30%
‐0.30%
‐0.25%
‐0.25%
‐0.20%
‐0.20%
‐0.10%
‐0.10%
1,830.4 2,241.9 2,626.1 2,967.5 3,088.0 3,141.5 3,361.5 3,054.1 2,672.4 2,223.4 2,312.3 8.00%
8.00%
8.00%
8.00%
7.50%
7.00%
7.00%
6.00%
5.00%
4.00%
4.00%
(91.5)
(112.1)
(131.3)
(126.1)
65.9 596.9 936.4 1,842.7 3,132.0 4,213.3 4,381.9 22.5%
17.14%
‐3.95% ‐152.24% 806.06% 56.88% 96.78% 69.97%
34.53%
4.00%
(85.5)
% Growth
PV of Future Free Cash Flow
(79.9)
NPV of Cash Flows
3,960.6 NPV of terminal value
9,786.9 Projected Equity Value
Free Cash Flow Yield
13,747.5 ‐0.85%
Current P/E
9.53 7.78 12.11 9.89 Projected P/E
Current EV/EBITDA
2.70
Projected EV/EBITDA
Shares Outstanding
192.5
Implied equity value/share
$ 56.17 $ 71.42 Upside/(Downside) to DCF
27.14%
Current Price
(87.5)
(73.4)
33.5 264.9 362.9 623.7 925.9 1,087.9 988.1 28.81%
71.19%
100.00%
2.21
Termina Value=
Free Cash Yield=
43401.501
10.10%
6.64 Termina P/E=
8.65 8.44 Terminal EV/EITDA= 4.04 1.88
Relative to
Industry
P/Trailing E
P/Forward E
P/B
P/S
P/CF
High
Relative to S&P
500
P/Trailing E
P/Forward E
P/B
P/S
P/CF
High
Absolute
Valuation
A.
P/Forward E
P/S
P/B
P/EBITDA
P/CF
Low
2.8
2
1.7
1.7
2.1
.55
.46
.6
.5
.4
B.
36.2
1.7
4.1
11.42
13.7
Low
C.
6.7
.3
1.3
2.22
3.4
Current
1.5
1.2
.9
.9
1.2
Low
2.9
1.6
1.3
1.1
1.3
High
Median
Median
.35
.33
.5
.4
.3
.98
1.1
.8
.6
.8
Current
.98
.88
.9
.6
.8
Median
Current
#Your
Target
Multiple
D.
13.7
.8
2.6
6.42
8.9
E.
10.6
.5
1.4
4.60
5.9
F.
13.7
.7
2.0
6.42
8.9
.86
.75
.7
.4
.6
*Your
Target E,
S, B,
etc/Share
G.
4.62
120.44
39.45
12.2
9.53
Your
Target
Price
(F x G)
H.
63.29
84.30
78.90
78.32
84.81
ƒ
MUR is experiencing strong & steady expansion & growth
ƒ
MUR has major portion of its operations outside of US & the developed world
ƒ
MUR will experience capturing the growth in energy demand coming from the emerging markets
ƒ
Naturally MUR will be subjected to further systematic risk & uncertainty(political, currency, ….)
ƒ
MUR presents a great opportunity for investment in energy sector by capitalizing on the expected stronger growth from emerging markets
ƒ
With putting 75% confidence on DCF results and 25% confidence on multiples valuation our final target price on MUR is: $73.00 with 30% upside
ƒ
HOLD CVX at 400bp Due to 16.3% Upside
ƒ
HOLD NOV at 330bp Due to very conservative 12% Upside
ƒ
SELL NE & get the rid of 260 bp of it
ƒ
BUY MUR, with 260 bp of NE and extra 110(total of 370 bp of MUR)
Finally SIM’s Energy Will be In Line With S&P500