Industry Overview - The Zacks Oil and Gas Integrated International industry includes companies involved in upstream, midstream, and downstream operations across various global regions [3] - Integrated energy companies are increasingly focusing on renewable energy to transition towards lower emissions and reduced carbon intensity [3] Current Challenges - Trade tensions are creating uncertainty in the business environment, potentially leading to economic slowdowns [1][4] - A slowdown in oil production growth is negatively impacting upstream revenues, as companies prioritize returning capital to shareholders over production expansion [5] - Growing demand for renewable energy is expected to decrease reliance on fossil fuels, adversely affecting integrated energy firms that primarily produce and transport oil and gas [6] Industry Performance - The Zacks Oil and Gas Integrated International industry ranks 183, placing it in the bottom 26% of over 250 Zacks industries, indicating bearish near-term prospects [7][8] - Over the past year, the industry has underperformed compared to the broader Zacks Oil - Energy sector and the S&P 500, with a decline of 11.2% versus the S&P 500's gain of 11.5% [9][10] Valuation Metrics - The industry is currently trading at a trailing 12-month EV/EBITDA ratio of 3.97X, significantly lower than the S&P 500's 15.32X and the sector's 4.38X [13] - Historical trading ranges for the industry have been between 2.74X and 6.54X over the past five years, with a median of 4.11X [14] Key Companies - BP has initiated production from three key projects, aiming to increase its production capacity by 100 MBbl/D, with a long-term goal of 250 MBbl/D by 2027 [18] - ExxonMobil's acquisition of Pioneer Natural Resources enhances its production capabilities in the Permian Basin, known for low production costs [22] - Chevron is a major producer in the Permian Basin, maintaining a conservative capital spending approach that supports strong cash flow generation [24]
3 Integrated Energy Stocks to Gain Despite Ongoing Trade Tensions