Santos Ltd. (STO.AX)
Energy · ASX · Australia
Fundamentals
Valuation and ratings
Santos Ltd. trades at A$7.66, which is 31% below the A$10.01 our discounted cash flow model puts on the business. On that measure alone it screens as undervalued, though a DCF is an argument rather than a measurement, and the market is frequently right about why something is cheap.
Our moat model scores it 46 out of 100, which is a moat, but not a deep one. A moat is a structural reason competitors cannot take the profits away, and it matters more to a long holding period than any single quarter's numbers do.
It changes hands at 21.2 times earnings. Be careful reading that in isolation: for a cyclical business a low P/E arrives at the top of the cycle, when profits are peaking and about to fall, which is exactly when the shares look cheapest and are not.
About Santos Ltd.
Santos Limited explores, develops, produces, transports, and markets hydrocarbons in Australia and Papua New Guinea. The company's assets are located in the Alaska, Cooper Basin, Queensland and New South Wales, Papua New Guinea, Northern Australia, Timor-Leste and Western Australia. It also engages in the development of decarbonization technologies. In addition, the company produces crude oil, liquefied petroleum gas, ethane, liquefied natural gas, and condensate, as well as natural gas. Santos Limited was incorporated in 1954 and is headquartered in Adelaide, Australia.
STO.AX passes 4 of our 30 screens today
Each screen prints the exact criteria it used, and the circumstances in which it is wrong.
Common questions
Is Santos Ltd. (STO.AX) undervalued?
Against our discounted cash flow estimate of A$10.01, STO.AX at A$7.66 is 31% below fair value. That is one model's answer, not a recommendation, and most of a DCF's output sits in a terminal value nobody can forecast.
What is STO.AX's P/E ratio?
STO.AX trades at 21.2 times earnings. A low P/E is not automatically cheap: on a cyclical company it is usually a warning that earnings are at a peak.
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Data from company filings, exchange quotes and SEC EDGAR 13F disclosures. Quotes are delayed. Metrics we do not have are left out rather than estimated. Educational information, not financial advice.