NEW YORK (TheStreet) -- Shares of Total (TOT) - Get Report were gaining 2.3% to $44 on Tuesday as oil prices were rebounding from recent losses on expectations that the recent slowdown in U.S. oil production will accelerate.
WTI crude oil for November delivery was up 2.05% to $45.34 a barrel mid-day Tuesday, and Brent crude oil for November delivery was up 2.09% to $48.33 a barrel.
In a note to investors, analyst firm Deutsche Bank said that "revised supply estimates that non-OPEC supply will contract next year for the first time since 2008."
Deutsche Bank analysts said they expect the oil market to "remain oversupplied in 2016" despite an anticipated contraction from non-OPEC countries. The analyst firm expects the oil market will continue to be oversupplied by about 1 million barrels a day in the first half of 2016, falling to a deficit of 310,000 barrels a day in the second half of the year.
OPEC members and other major oil producers such as Russia are still expected to produce oil at high levels, according to the Wall Street Journal.
Total is a multinational integrated oil and gas company based in France.
TheStreet Ratings team rates TOTAL SA as a Hold with a ratings score of C+. TheStreet Ratings Team has this to say about their recommendation:
We rate TOTAL SA (TOT) a HOLD. The primary factors that have impacted our rating are mixed -- some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. Among the primary strengths of the company is its solid financial position based on a variety of debt and liquidity measures that we have evaluated. At the same time, however, we also find weaknesses including a generally disappointing performance in the stock itself, disappointing return on equity and weak operating cash flow.
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The current debt-to-equity ratio, 0.58, is low and is below the industry average, implying that there has been successful management of debt levels. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.80 is somewhat weak and could be cause for future problems.
- Regardless of the drop in revenue, the company managed to outperform against the industry average of 34.6%. Since the same quarter one year prior, revenues fell by 30.1%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
- The change in net income from the same quarter one year ago has exceeded that of the S&P 500 and greatly outperformed compared to the Oil, Gas & Consumable Fuels industry average. The net income has decreased by 4.3% when compared to the same quarter one year ago, dropping from $3,104.00 million to $2,971.00 million.
- Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. Compared to other companies in the Oil, Gas & Consumable Fuels industry and the overall market, TOTAL SA's return on equity significantly trails that of both the industry average and the S&P 500.
- Looking at the price performance of TOT's shares over the past 12 months, there is not much good news to report: the stock is down 31.26%, and it has underformed the S&P 500 Index. In addition, the company's earnings per share are lower today than the year-earlier quarter. Despite the heavy decline in its share price, this stock is still more expensive (when compared to its current earnings) than most other companies in its industry.
- You can view the full analysis from the report here: TOT