Royal Dutch Shell (RDS.A) vs. Total (NYSE:TOT) Critical Review

Total (NYSE: TOT) and Royal Dutch Shell (NYSE:RDS.A) are both large-cap oils/energy companies, but which is the superior business? We will compare the two companies based on the strength of their valuation, dividends, analyst recommendations, risk, profitability, institutional ownership and earnings.

Dividends

Total pays an annual dividend of $1.13 per share and has a dividend yield of 2.0%. Royal Dutch Shell pays an annual dividend of $3.20 per share and has a dividend yield of 4.8%. Total pays out 35.5% of its earnings in the form of a dividend. Royal Dutch Shell pays out 123.6% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Institutional and Insider Ownership

5.4% of Total shares are held by institutional investors. Comparatively, 6.5% of Royal Dutch Shell shares are held by institutional investors. 1.0% of Royal Dutch Shell shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Valuation & Earnings

This table compares Total and Royal Dutch Shell’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Total $149.74 billion 0.92 $6.20 billion $3.18 17.38
Royal Dutch Shell $233.59 billion 1.18 $4.58 billion $2.59 25.76

Total has higher earnings, but lower revenue than Royal Dutch Shell. Total is trading at a lower price-to-earnings ratio than Royal Dutch Shell, indicating that it is currently the more affordable of the two stocks.

Volatility and Risk

Total has a beta of 0.77, suggesting that its stock price is 23% less volatile than the S&P 500. Comparatively, Royal Dutch Shell has a beta of 1.08, suggesting that its stock price is 8% more volatile than the S&P 500.

Profitability

This table compares Total and Royal Dutch Shell’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Total 4.90% 9.39% 4.34%
Royal Dutch Shell 3.71% 6.64% 3.13%

Analyst Ratings

This is a breakdown of current recommendations and price targets for Total and Royal Dutch Shell, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Total 1 8 6 0 2.33
Royal Dutch Shell 1 3 11 0 2.67

Total currently has a consensus target price of $50.83, suggesting a potential downside of 8.04%. Royal Dutch Shell has a consensus target price of $59.37, suggesting a potential downside of 11.01%. Given Total’s higher probable upside, research analysts clearly believe Total is more favorable than Royal Dutch Shell.

Summary

Royal Dutch Shell beats Total on 9 of the 16 factors compared between the two stocks.

Total Company Profile

Total S.A. (Total) is an oil and gas company. The Company has three segments: an Upstream segment, including the activities of the exploration and production of hydrocarbons, and the activities of gas and power; a Refining & Chemicals segment constituting an industrial hub consisting of the activities of refining, petrochemicals and specialty chemicals, and also includes the activities of oil trading and shipping, and a Marketing & Services segment, including the activities of supply and marketing in the field of petroleum products, as well as the activity of New Energies. Its Corporate segment includes holdings operating and financial activities. The Company operates in the renewable energies and power generation sectors. It is engaged in various sectors of oil and gas industry, including upstream (hydrocarbon exploration, development and production) and downstream (refining, petrochemicals, specialty chemicals, trading and shipping of crude oil and petroleum products and marketing).

Royal Dutch Shell Company Profile

The Royal Dutch Shell plc explores for crude oil and natural gas around the world, both in conventional fields and from sources, such as tight rock, shale and coal formations. The Company’s segments include Integrated Gas, Upstream, Downstream and Corporate. The Integrated Gas segment is engaged in the liquefaction and transportation of gas and the conversion of natural gas to liquids to provide fuels and other products, as well as projects with an integrated activity, ranging from producing to commercializing gas. The Upstream segment includes the operations of Upstream, which is engaged in the exploration for and extraction of crude oil, natural gas and natural gas liquids, and the marketing and transportation of oil and gas, and Oil Sands, which is engaged in the extraction of bitumen from mined oil sands and conversion into synthetic crude oil. The Downstream segment is engaged in oil products and chemicals manufacturing, and marketing activities.

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