Q: Hello Team,
Could you share your thoughts on TOU please? It's been sliding for a month or so. Is this a good time to add?
Many thanks!
Could you share your thoughts on TOU please? It's been sliding for a month or so. Is this a good time to add?
Many thanks!
5i Research Answer:
TOU’s recent move has been largely in line with the volatility of commodities and news regarding the Iran War and the Strait of Hormuz. However, fundamentally, TOU has been in a heavy investment cycle over the last few years, which has ramped up capital expenditures meaningfully, putting pressure on free cash flow (FCF) and, as a result, its share price. The company recently announced that capex has already peaked and will likely decline in 2026, giving more room to increase capital returns to shareholders in the form of higher dividends or special dividends. Overall, TOU could do well if FCF recovers (very likely as capex peaks).