Financial analysis of Lukoil

Term Paper, 2012

19 Pages, Grade: A


Financial Analysis of Lukoil

Share Price

Despite the fact that share price is not the best indicator of firm’s financial performance because of the fact that many others factors including speculation impact the share price of any company, in the long term, it is a strong manifestation of the firm’s performance in the market and its appeal to the investors. Quite visibly, the company’s share price was peaking at a level of 2450 during the second quarter of 2008, which could be marked as the last few months of the economic boom and after which, when recession impacted Russia during the first quarter of 2009, the share prices of Lukoil plunged to the lowest level of 749. However, the economy of Russia has been quick in recovering, unlike Europe, which due to its debt crisis is predicting a double dip recession. As the graph reveals, Lukoil’s share price has now restored to the similar level where it was during the first quarter of 2008.

illustration not visible in this excerpt

(Source: Lukoil, 2012)

Profit Margin, Operating Margin and Gross Margin

Over the past five years, the firm’s profitability has decreased which is evident from the sliding profit, operating and gross margins. These margins have became more steadier during the last couple of years but all of them plunged during the 2007-2009 period indicating that the firm had to spend more during the recession in order to survive and remain profitable. Furthermore, a huge gap between the gross margin and operating margin indicates that Lukoil is spending considerably high sums of money for operating expenses which should be looked into and tapped. On the plus side, the increasing proximity of the firm’s operating and profit margin indicates that its interest expense has been decreasing over the years thus making the business less risky.

illustration not visible in this excerpt

(Source: Lukoil, 2012)

EPS and Return on Equity

As mentioned earlier that the firm has been decreasing its dependence on debt, however, the decreasing return on equity reveals that it has been increasing its dependence on equity. Despite the fact that this will deperive the firm of interest cover and expose to greater taxes, considering the current financial crunch and European Debt Crisis, it is better that Lukoil goes more stable and less risky business model.

On the other hand, the EPS of the company reveals no signifcant insight other than the fact that the recession had an impact on the EPS of the company. The sliding of EPS from the period of 2007-2009 and the rise back in the year 2010 can only be attributed to the financial crisis.

illustration not visible in this excerpt

(Source: Lukoil, 2012)

illustration not visible in this excerpt

(Source: Lukoil, 2012)


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Financial analysis of Lukoil
Monash University Melbourne
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ISBN (eBook)
ISBN (Book)
File size
520 KB
financial, lukoil
Quote paper
Billy George (Author), 2012, Financial analysis of Lukoil, Munich, GRIN Verlag,


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