Porfolio Managment reasearch paper
FFA90
cop.pptx_.zipCOP.pptx
Conoco Philips
History
Founded in 1875
Headquarter location: Houston, Texas
ConocoPhillips is “the world’s largest independent exploration and production company, based on proved reserves and production of liquids and natural gas. We explore for, develop, and produce crude oil and natural gas globally. A commitment to safety, operating excellence and environmental stewardship guide our operations. “
Mission Statement
“We explore for, produce, transport and market crude oil, natural gas, natural gas liquids, liquefied natural gas and bitumen on a worldwide basis - energy that plays a foundational role in enabling global economic development and human progress.”
5 Force Analysis
Threat of New Entrants:
Minimal, no real threat.
Threat of Substitute:
Degree of Rivalry:
Intense
Bargaining power of Suppliers:
Medium
Bargaining power of Buyers:
Limited
Worldwide Operations and Locations
Production and Reserves
Average Daily Net Production
World oil Supply
World Oil Demand
Competitive Strengths
Globalization: Meet demand for every region.
Diversification of revenue.
Focusing on increasing productions in a low cost region
Financial Analysis
Growth Estimates :-
Current Quarter = - 1,114.30 %
Next Quarter = - 34.20 %
This Year = - 65.70 %
Next Year = 112.90 %
Past 5 Years = - 29.59 %
Next 5 Years = -55.55 %
Financial Analysis
Revenue :-
Avg Estimate = 6.49 B
Low = 5.38 B
High = 7.6 B
Sales :-
Year Ago Sales = 8.66 B
Sales Growth = -25.10 %
Financial Analysis
Profitability
EBIT = (6,319,000)
Net Margin is meaning less because the company has a Net loss.
Inventory Turnover = COGS/ending Inventory
19,442,000/ 1,124,000 = 17.3 x
Receivable turnover = Sales/ Ave Receivable
29,564,000/ 4,514,000 = 6.55 x
Fixed Asset Turnover = Sales/Fixed Assets
29,564,000/ 88,695,000 = .33 x
Total Asset Turnover = Sales/ Total Assets
29,564,000/ 97,484,000 = .30 x
Financial Analysis
Financial Leverage :-
Total Debt = LT + ST
23,453,000 + 1,427,000 = $ 24,880,000
Equity = $ 39,762,000
Total Assets = $ 97,484,000
Debt Equity Ratio = Debt/ Equity
= .63
Total Assets/Equity
= 2.45
Financial Analysis
Free Cash Flow Analysis
Operating Cash flow ( OCF )
= EBIT + Depreciation – Taxes
= -6,319,000 + 9,596,000 – 2,868,000
= $ 409,000 Million
Free cash flow to the firm (FCF)
= OCF – Capex – YOY change of W/ Capital (CA-CL)
= 409,000 – (10,050,000) – ( 467,000)
= -10,108,000
DCF
The way I used to calculate the Free Cash Flow was the average of the last 3 years income statement.
9,156 + 6,896 + ( - 4,428)/ 3 = $ 3,865,667
Free Cash flow per share = 3,865,667/1,240,000,000 = $ 3
Came out to be = $ 47
DDM Model
DDM =1.98( 1+ 4)/(11.2-4) = $ 29
DCF = 47
Average price = 47+ 29/2
= $ 38 < $45 < $50
P/E = 45/(- 4.98) = -9%
Stock Price
Stock Price : 45.02
Previous Close : 44.90
Today Open : 45.42
Day’s Range : 44.87 – 45.78
52wk Range : 31.05 – 69.72
Beta : 1.44405 from last week Today : 1.44405
EPS : -4.98
Market Cap: 55.58 B
Investment summary and Recommendation
For Growth rate, COP has a negative growth rate for this year.
The company has a net loss and Financial wise, it is not going well.
Its stock price is overvalued.
Strong competition around the world.
Recommendation :-
Either selling the stock, or holding it until the end of 2017.
1st Quarter Summary
Achieved 1st quarter production of 1,578 MBOED.
Lowered operating costs by more than 20 percent year over year.
Reduced 2016 capital expenditures guidance from $6.4 billion to $5.7 billion.
Raised $4.6 billion of low-cost debt and ended the quarter with $5.2 billion of cash and short-term investments.
Cut down Dividends by 75%.
