ConocoPhillips: Another Company To Suffer Due To The Funding Gap?
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
Business relationship disclosure: EfsInvestment is a team of analysts. This article was written by Ahmed Ishtiaq, one of our equity researchers. We did not receive compensation for this article (other than from Seeking Alpha), and we have no business relationship with any company whose stock is mentioned in this article.
ConocoPhillips (COP) is the world's largest independent exploration and production company. The company explores for oil and gas in more than 30 countries and has proved reserves of 8.4 billion barrels of oil equivalent. ConocoPhillips is one of the best dividend payers in the sector and the stock has an attractive yield of 4.50%, almost double the industry average. Furthermore, the stock has returned over 50% since the recession and it has proved to be an astute investment. The recent spin-off has separated the exploration and production (E&P) and marketing businesses of the company. As a result of the spin-off, the company now has more room to wriggle, and it can now focus on the exploration and production activities.
In this article, I have tried to look at the dividend and valuation of the company. Moreover, I have looked at the investor sentiment about the company and how it can affect the valuation. At the moment, dividends have a big impact on the valuation of the stock. However, the focus on dividends can affect the valuation in the future if the cash flows of the company fall below the expected levels. Let's take a look at the expected cash inflows and out flows and how these can affect the valuation. READ FULL ARTICLE HERE