ASX:STO

Stock Analysis Report

Executive Summary

Santos Limited explores for, develops, produces, transports, and markets hydrocarbons for homes and businesses in Australia and Asia.

Snowflake

Fundamentals

Adequate balance sheet and fair value.


Similar Companies

Share Price & News

How has Santos's share price performed over time and what events caused price changes?


Latest Share Price and Events


Market Performance


7 Day Return

6.4%

STO

3.9%

AU Oil and Gas

2.5%

AU Market


1 Year Return

11.4%

STO

-9.7%

AU Oil and Gas

11.1%

AU Market

Return vs Industry: STO exceeded the Australian Oil and Gas industry which returned -9.7% over the past year.

Return vs Market: STO matched the Australian Market which returned 11.1% over the past year.


Shareholder returns

STOIndustryMarket
7 Day6.4%3.9%2.5%
30 Day-0.1%-1.4%0.7%
90 Day14.3%2.7%1.4%
1 Year14.2%11.4%-5.9%-9.7%17.5%11.1%
3 Year111.6%105.0%17.0%4.7%37.8%19.4%
5 Year-22.3%-38.5%-12.1%-28.0%51.7%17.6%

Price Volatility Vs. Market

How volatile is Santos's share price compared to the market and industry in the last 5 years?


Simply Wall St News

Valuation

Is Santos undervalued compared to its fair value and its price relative to the market?

43.4%

Undervalued compared to fair value


Share Price vs. Fair Value

Undervalued: STO (A$7.83) is trading below our estimate of fair value (A$13.84)

Significantly Undervalued: STO is trading below fair value by more than 20%.


Price To Earnings Ratio

PE vs Industry: STO is poor value based on its PE Ratio (12x) compared to the Oil and Gas industry average (9.2x).

PE vs Market: STO is good value based on its PE Ratio (12x) compared to the Australian market (18x).


Price to Earnings Growth Ratio

Low PEG Ratio: STO is poor value based on its PEG Ratio (4.8x)


Price to Book Ratio

PB vs Industry: STO is overvalued based on its PB Ratio (1.5x) compared to the AU Oil and Gas industry average (1.3x).


Next Steps

Future Growth

How is Santos forecast to perform in the next 1 to 3 years based on estimates from 13 analysts?

2.5%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: STO's forecast earnings growth (2.5% per year) is above the savings rate (2.3%).

Earnings vs Market: STO's earnings (2.5% per year) are forecast to grow slower than the Australian market (10.3% per year).

High Growth Earnings: STO's earnings are forecast to grow, but not significantly.

Revenue vs Market: STO's revenue (3.3% per year) is forecast to grow slower than the Australian market (3.6% per year).

High Growth Revenue: STO's revenue (3.3% per year) is forecast to grow slower than 20% per year.


Earnings per Share Growth Forecasts


Future Return on Equity

High Future ROE: STO's Return on Equity is forecast to be low in 3 years time (11.6%).


Next Steps

Past Performance

How has Santos performed over the past 5 years?

35.7%

Historical annual earnings growth


Earnings and Revenue History


Past Earnings Growth Analysis

Earnings Trend: STO's earnings have grown significantly by 35.7% per year over the past 5 years.

Accelerating Growth: STO's earnings growth over the past year (265.6%) exceeds its 5-year average (35.7% per year).

Earnings vs Industry: STO earnings growth over the past year (265.6%) exceeded the Oil and Gas industry 68.1%.


Return on Equity

High ROE: STO's Return on Equity (12.1%) is considered low.


Return on Assets

ROA vs Industry: STO's Return on Assets is below or equal to the Oil and Gas industry average last year.


Return on Capital Employed

ROCE Improving: STO's Return on Capital Employed has declined over the past 3 years.


Next Steps

Financial Health

How is Santos's financial position?


Financial Position Analysis

Short Term Liabilities: STO's short term assets ($2.0B) exceeds its short term liabilities ($1.2B)

Long Term Liabilities: STO's short term assets (2.0B) do not cover its long term liabilities (8.5B)


Debt to Equity History and Analysis

Debt Level: STO's debt to equity ratio (56.4%) is considered high

Reducing Debt: STO's debt to equity ratio has reduced from 63.5% to 56.4% over the past 5 years.

Debt Coverage: STO's debt is well covered by operating cash flow (46.7%).

Interest Coverage: STO's interest payments on its debt are well covered by EBIT (6.8x coverage).


Balance Sheet

Inventory Level: STO has a high level of physical assets or inventory.

Debt Coverage by Assets: STO's debt is not covered by short term assets (assets are 0.5x debt).


Next Steps

Dividend

What is Santos's current dividend yield, its reliability and sustainability?

2.34%

Current Dividend Yield


Dividend Yield vs Market

company2.3%marketbottom25%2.5%markettop25%5.6%industryaverage4.5%forecastin3Years1.9%

Current dividend yield vs market & industry


Stability and Growth of Payments

Notable Dividend: STO's dividend (2.35%) isn’t notable compared to the bottom 25% of dividend payers in the Australian market (2.46%).

High Dividend: STO's dividend (2.35%) is low compared to the top 25% of dividend payers in the Australian market (5.56%).

Stable Dividend: STO's dividend payments have been volatile in the past 10 years.

Growing Dividend: STO's dividend payments have fallen over the past 10 years.


Current Payout to Shareholders

Dividend Coverage: With its reasonably low payout ratio (27.8%), STO's dividend payments are well covered by earnings.


Future Payout to Shareholders

Future Dividend Coverage: STO's dividends in 3 years are forecast to be well covered by earnings (19.3% payout ratio).


Next Steps

Management

What is the CEO of Santos's salary, the management and board of directors tenure and is there insider trading?

2.6yrs

Average management tenure


CEO

Kevin Gallagher (54yo)

3.7yrs

Tenure

US$3,860,154

Compensation

Mr. Kevin Thomas Gallagher, B.Eng, MAICD, FIEAust, has been the Chief Executive Officer and Managing Director of Santos Limited since February 1, 2016. Mr. Gallagher served as the Chief Executive Officer o ...


CEO Compensation Analysis

Compensation vs. Market: Kevin's total compensation ($USD3.86M) is about average for companies of similar size in the Australian market ($USD3.84M).

Compensation vs Earnings: Kevin's compensation has been consistent with company performance over the past year.


Management Age and Tenure

2.6yrs

Average Tenure

Experienced Management: STO's management team is considered experienced (2.6 years average tenure).


Board Age and Tenure

3.4yrs

Average Tenure

64yo

Average Age

Experienced Board: STO's board of directors are considered experienced (3.4 years average tenure).


Insider Trading

Insider Buying: Insufficient data to determine if insiders have bought more shares than they have sold in the past 3 months.


Recent Insider Transactions

BuyUS$45,19126 Jun 19
BlackRock, Inc.
EntityCompany
Shares34,097,349
Max PriceUS$7.46
SellUS$387,60326 Jun 19
BlackRock, Inc.
EntityCompany
Shares29,350,802
Max PriceUS$7.46
BuyUS$59,77026 Feb 19
Guy Cowan
EntityIndividual
Role
Member of the Board of Directors
Independent Non-Executive Director
Shares8,600
Max PriceUS$6.95
BuyUS$44,99526 Feb 19
Vanessa Guthrie
EntityIndividual
Role
Member of the Board of Directors
Independent Non-Executive Director
Shares6,437
Max PriceUS$6.99

Ownership Breakdown


Management Team

  • Brett Woods

    Executive Vice President of Developments

    • Tenure: 2.6yrs
    • Compensation: US$1.18m
  • Andrew Nairn

    Group Executive of Investor Relations

    • Tenure: 11.7yrs
  • Vince Santostefano

    Executive Vice President of Production Operations

    • Tenure: 2.6yrs
    • Compensation: US$1.30m
  • Anthony Neilson

    Chief Financial Officer

    • Tenure: 2.8yrs
    • Compensation: US$1.15m
  • Kevin Gallagher (54yo)

    MD, CEO & Director

    • Tenure: 3.7yrs
    • Compensation: US$3.86m
  • Christian Paech

    Company Secretary & General Council

    • Tenure: 9.8yrs
  • Phil Byrne

    Executive Vice President of Marketing

    • Tenure: 2.2yrs
    • Compensation: US$884.52k
  • Bill Ovenden

    Executive Vice President of Exploration & New Ventures

    • Tenure: 2.6yrs
  • Brett Darley (52yo)

    Executive Vice President of Offshore Oil & Gas

    • Tenure: 0.9yrs
    • Compensation: US$644.15k
  • David Banks

    Executive Vice President of Onshore Oil & Gas

    • Tenure: 1.8yrs
    • Compensation: US$69.59k

Board Members

  • Peter Hearl (68yo)

    Independent Non-Executive Director

    • Tenure: 3.4yrs
    • Compensation: US$181.14k
  • Keith Spence (65yo)

    Independent Chairman

    • Tenure: 1.7yrs
    • Compensation: US$354.69k
  • Yasmin Allen (55yo)

    Independent Non-Executive Director

    • Tenure: 5yrs
    • Compensation: US$189.17k
  • Guy Cowan (67yo)

    Independent Non-Executive Director

    • Tenure: 3.4yrs
    • Compensation: US$169.46k
  • Hock Goh (64yo)

    Independent Non-Executive Director

    • Tenure: 7yrs
    • Compensation: US$175.16k
  • Vanessa Guthrie (57yo)

    Independent Non-Executive Director

    • Tenure: 2.3yrs
    • Compensation: US$162.79k
  • Kevin Gallagher (54yo)

    MD, CEO & Director

    • Tenure: 3.7yrs
    • Compensation: US$3.86m
  • Guan Yu

    Non-Executive Director

    • Tenure: 0.4yrs

Company Information

Santos Limited's company bio, employee growth, exchange listings and data sources


Key Information

  • Name: Santos Limited
  • Ticker: STO
  • Exchange: ASX
  • Founded: 1954
  • Industry: Oil and Gas Exploration and Production
  • Sector: Energy
  • Market Cap: AU$16.227b
  • Shares outstanding: 2.08b
  • Website: https://www.santos.com

Number of Employees


Location

  • Santos Limited
  • Santos Centre
  • Ground Floor
  • Adelaide
  • South Australia
  • 5000
  • Australia

Listings

TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
SSLZ.YOTCPK (Pink Sheets LLC)Sponsored AdrUSUSDJan 1975
STOS.FOTCPK (Pink Sheets LLC)YesOrdinary SharesUSUSDJan 1975
STS1DB (Deutsche Boerse AG)YesOrdinary SharesDEEURJan 1975
STOASX (Australian Securities Exchange)YesOrdinary SharesAUAUDJan 1975
STOCHIA (Chi-X Australia)YesOrdinary SharesAUAUDJan 1975

Biography

Santos Limited explores for, develops, produces, transports, and markets hydrocarbons for homes and businesses in Australia and Asia. Its five principal assets are located in the Cooper Basin, Queensland & ...


Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2019/10/17 10:34
End of Day Share Price2019/10/17 00:00
Earnings2019/06/30
Annual Earnings2018/12/31


Unless specified all financial data is based on a yearly period but updated quarterly. This is known as Trailing Twelve Month (TTM) or Last Twelve Month (LTM) Data. Learn more here.