Luxembourg based manufacturer of steel tube products with a presence in most major oil markets. 1 ADR = 2 ordinary shares.
P/E = 14.8; PEG = 0.61. At the current share price of $47.91 (3.3x sales) the stock is undervalued. Value = $49.83 using 2006 actual EPS of $3.24, and $53.52 using the analyst 2007 consensus of $3.48 - discounted cash flow valuation using 15% increase in earnings each of next 3 years, 3% reversion growth and 12% discount rate (possibly high). Revenue growth has exceeded 30% per year over the last four years. Dividend yield 1.3%, dividend paid annually in May. ROE = 40.0%. Long term debt = 23%, $1.4 billion cash on balance sheet. Tenaris is the leading manufacturer and supplier of steel tubes for drilling and production of oil and gas. The company has contracts to supply Gazprom's needs through 2008 and a new PBR pipeline in Brazil. TS currently manufactures 6mm tons of pipe annually. The company has factories in Italy, Mexico, Argentina, Japan, the US, Canada and Colombia. In May 2007, the US company Hydril was merged into Tenaris. Hydril is a Houston-based producer of pipe connections and pressure control products. At left TS is compared with GGB, Gerdau and DJIA over the last 3 years. The shares have been listed on NYX for a little over 4 years. This analysis is not investment advice and readers should conduct their own research before buying any stock.
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