What’s Installed For Surgutneftegas Open Joint Stock Company (MCX:SNGS)?

Surgutneftegas Open Joint Stock Company (MISX:SNGS), a RUРУБ1.05T large-cap, operates in the oil and gas industry which has persevered through an extended oil price slump since 2014. However, energy-sector analysts are forecasting for the entire industry, a highly optimistic growth of 63.45% in the upcoming year , and a robust short-term growth of 26.05% over the next couple of years. However, this rate came in below the growth rate of the RU stock market as a whole. Is now the right time to pick up some shares in oil and gas companies? Below, I will examine the sector growth prospects, as well as evaluate whether Surgutneftegas is lagging or leading its competitors in the industry. Check out our latest analysis for Surgutneftegas

What’s the catalyst for Surgutneftegas's sector growth?

Over the past couple of years, the energy sector delivered a disappointing 40% negative growth rate, driven by the oil price collapse. 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 over the past year, the industry turnaround led to growth in the twenties, beating the RU market growth of 14.28%. Surgutneftegas lags the pack with its negative growth rate of -72.16% over the past year, which indicates the company has been growing at a slower pace than its energy peers. However, in the upcoming year, Surgutneftegas is expected to deliver growth in-line with its industry peers, at a growth rate of 63.60%.

Is Surgutneftegas and the sector relatively cheap?

The oil and gas industry is trading at a PE ratio of 5.74x, relatively similar to the rest of the RU stock market PE of 7.82x. This illustrates a fairly valued sector relative to the rest of the market, indicating low mispricing opportunities. Furthermore, the industry returned a similar 13.81% on equities compared to the market’s 12.12%, potentially illustrative of a turnaround. On the stock-level, Surgutneftegas is trading at a PE ratio of 8.05x, which is relatively in-line with the average oil and gas stock. In terms of returns, Surgutneftegas generated 3.73% in the past year, which is 10.08% below the oil and gas sector.

Next Steps:

Surgutneftegas's future growth prospect aligns with that of the broader market and it is trading in-line with its peers. So if you like its growth prospects, you’ll be paying a fair value for the company. If the stock has been on your watchlist for a while, now may be the time to enter. However, before you make a decision on the stock, I suggest you look at Surgutneftegas'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 SNGS'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 Surgutneftegas? 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.