TechnipFMC (#FTI) is a British oilfield services company. It is engaged in oil and gas projects, technology development and services in three key segments - underwater (subsea), energy segment and land-based technologies segment.
The Company looks as a good holding for an Optimal Risk Portfolio at current price level:
1) TechnipFMC looks steady in the coronavirus crisis. The company has done relatively well considering the decline in energy services caused by the Covid 19 crisis and lockdowns. The company's current pipeline includes orders worth of $19.6 billion, of which 10 billions have already been reserved for 2021, which is about 80% of TechnipFMC's revenue.
2) Thanks to the large volume of cash on the balance sheet, TechnipFMC has a low
debt load. Thus, the Net debt EBITDA ratio at the end of 2020 could be about 0.4 x.
3) Shares are undervalued in comparison to its competitors in the market. Against the background of a good fundamental picture of the stock : based on our analysis, the current price ($ 7.28) is 14.6% undervalued compared to fair value ($ 8.52).
However, it is vital to consider all the risks involved, the main risk, in our view, is
the fact that the coronavirus crisis may be prolonged and the current Debt/Equity ratio is at 90.3%.
OTB Global Investments
London, 23 February 2021