Magix Sixes – Quick Check Esso S.A.F. (ISIN FR0000120669)
Another “New Entry” in the Magix Sixes Screen (P/B < 0.6, P/E 6%) is Esso S.A.F.
The company is described by Bloomberg as follows:
Esso S.A.F. refines, distributes and sells petroleum products such as gasoline, heating and other fuels, distillates and asphalt. The Company’s subsidiaries include Esso REP and Esso Raffinage.
Esso is a 82% subsidiary of Exxon Mobile, market cap is around 800 mn EUR (12.9 mn shares at 63.4 EUR)
Current “traditional” valuation metrics are:
P/E 10: 5.3
Div. Yield 7.9%
EV/EBITDA /Trailing 12M) ~6.0
Almost no financial debt
Tangible Book /NAV = 95%, almost no intangibles
So at a first glance, the stock looks extremely attractive.
However, a quick look at the Earnings history quickly shows that it is a low margin and highly volatile business:
The Chart looks interesting, the stock trades at all time lows:
Among the minority investors, only Sparinvest as known Value shop has a small position. The share is only coverd by three bank analysts with infrequent coverage (which is good).
Summary: Based on the very first screening, Esso S.A.F. could be an interesting contrarian and highly cyclical investment, as the comnpany has a very solid balance sheet. However, I need to dig a little bit deeper into the past in order to identify potential structural issues.