Repsol S.A., through subsidiaries, explores for and produces crude oil and natural gas, refines petroleum, and transports petroleum products and liquefied petroleum gas (LPG). The Company retails gasoline and other products through its chain of gasoline filling stations. Repsol’s petroleum reserves are in Spain, Latin America, Asia, North Africa, and the Middle East and United States.
This stock is in the oil & gas industry, which has proven to be an excellent industry over the trailing 5 and 10 year periods. Compared to other stocks in its industry, though, its five-year returns have been about average. Every stock holder must remember that historic returns are not enough basis to predict the future growth of a company or an industry. Consistency must be considered in order to properly evaluate the structure of an industry or the kind of management a company has.
The stock’s earnings yield in the annual return it would generate if its profits remained fixed and it paid out all of its earnings as dividends. This is normal compared with the earnings yields of other stocks in its industry, but it is extremely healthy in absolute terms. For this company to generate decent returns for investors, it will probably only have to realize moderate growth in earnings or a higher valuation by the market. It is, however, important to be reasonably confident about the quality of this stock’s earnings.
Most companies in the oil & gas industry have generated very low returns on assets. But market has boom up in this industry so there stock would be profitable.