E Gazprom: Incredibly Powerful And Amazingly Cheap

The new Gazprom building, company headquarters in St. Petersburg Russia, scheduled completion 2018. The building has a height of 462 meters or 1,516 feet, making it the tallest skyscraper in Europe and taller than any building in the U.S. (excluding One World Trade Center, which is 541 meters or 1,775 feet)

Source: e-architect.co.uk Lakhta Centre, St Petersburg : Gazprom Tower
 

The Cheapest Most Powerful Energy Company In The World

After 12 years atop the global energy paradigm Exxon Mobile (XOM) was recently dethroned by Russian energy giant Gazprom (OTCPK: OGZPY). Russia’s energy juggernaut moved up two spots from last year and is now the number one company on the 2017 S&P Global Platts Top 250 Global Energy Company Rankings list. The ratings are based on a formula that equally weighs revenues, profits, asset values and returns on invested capital. Also, the stock is up by over 20% since I recommended the company in this Marketplace Article just 3 weeks ago. However, despite the recent stock gains and Gazprom’s position as the top publically traded energy company in the world, it remains extremely undervalued. 

Gazprom 1-Year Chart

(Click on image to enlarge)

Source: stockcharts.com

Let’s look at some key statistics and valuation metrics concerning Gazprom.

As we can see, this company is massive, in conjunction to producing enormous revenues, this company also employs nearly half a million people around the globe. And as incredible as it may seem it currently trades at roughly half times sales and at a P/E ratio of just 4. In comparison, Exxon trades at 1.66 times sales and at 28 times trailing earnings. Exxon is an excellent company, but from a valuation standpoint, it’s clear which I would rather own. 

Why is it So Cheap?

There are a few elements responsible for the current undervaluation of this stock. First, the Russian market as a whole is much cheaper than just about any market in the world. Average stocks in Russia trade for about 7 times earnings as opposed to stocks in the S&P 500 that trade at an average P/E ratio of 27. 

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Disclosure: I am long OGZPY.

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Alpha Stockman 3 years ago Member's comment

Thanks, it's hard to find good coverage on #Gazprom.