Is Mosman Oil And Gas Limited (LON:MSMN) Thriving Or Barely Surviving In The Oil & Gas Sector?

Mosman Oil And Gas Limited (AIM:MSMN), a UK£3.22M small-cap, is an oil and gas company operating in an industry which has seen an extended oil price slump since 2014. However, energy-sector analysts are forecasting for the entire industry, negative growth in the upcoming year , and a strong near-term growth of 20.77% over the next couple of years. This rate is larger than the growth rate of the UK stock market as a whole. Is the oil and gas industry an attractive sector-play right now? Today, I will analyse the industry outlook, as well as evaluate whether Mosman Oil And Gas is lagging or leading its competitors in the industry. Check out our latest analysis for Mosman Oil And Gas

What’s the catalyst for Mosman Oil And Gas's sector growth?

The oil price collapse drove a negative 40% growth in the energy sector in the past five years. Global oil and gas companies cut capital expenditures by about 40% during 2014 and 2016, and as part of this cost cutting initiative, some 400,000 workers were let go, with major projects cancelled or deferred. Only now has the sector begun to emerge from its turmoil, and in the past year, the industry turnaround delivered growth of over 100%, beating the UK market growth of 11.95%. Mosman Oil And Gas lags the pack with its sustained negative earnings over the past couple of years. The company's outlook seems uncertain, with a lack of analyst coverage, which doesn't boost our confidence in the stock. This lack of growth and transparency means Mosman Oil And Gas may be trading cheaper than its peers.

Is Mosman Oil And Gas and the sector relatively cheap?

The oil and gas industry is trading at a PE ratio of 14.56x, in-line with the UK stock market PE of 17.76x. This illustrates a fairly valued sector relative to the rest of the market, indicating low mispricing opportunities. However, the industry returned a lower 6.79% compared to the market’s 11.98%, illustrative of the recent sector upheaval. Since Mosman Oil And Gas’s earnings doesn’t seem to reflect its true value, its PE ratio isn’t very useful. A loose alternative to gauge Mosman Oil And Gas’s value is to assume the stock should be relatively in-line with its industry.

Next Steps:

Mosman Oil And Gas has been an energy industry laggard in the past year. If Mosman Oil And Gas has been on your watchlist for a while, now may be a good time to dig deeper into the stock. Although it delivered lower growth relative to its energy peers in the near term, the market may be pessimistic on the stock, leading to a potential undervaluation. However, before you make a decision on the stock, I suggest you look at Mosman Oil And Gas's fundamentals in order to build a holistic investment thesis.

• 1. Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
• 2. Historical Track Record: What has MSMN's performance been like over the past? Go into more detail in the past track record analysis and take a look at the free visual representations of our analysis for more clarity.
• 3. Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Mosman Oil And Gas? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!

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Simply Wall St analyst Simply Wall St and Simply Wall St have no position in any of the companies mentioned. This article is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.