Orange may be fairly valued with decent growth factors, but the lone analyst who follows Orange has a rating of underperform and a target price of $8.67, which is 48.62 away from its current price of $12.88 per share.
Orange S.A. provides various fixed telephony and mobile telecommunications, data transmission, and other value-added services to customers, businesses, and other telecommunications operators in France and internationally. Based in Issy-les-Moulineaux, France, the large-cap Telecommunications company has 136,430 full time employees. Orange has offered a 5.6% dividend yield over the last 12 months.
Orange has a trailing twelve month P/E ratio of 15.7, compared to an average of 18.85 for the Telecommunications sector. Based on its EPS guidance of 1.2, the company has a forward P/E ratio of 10.7.
The average compound growth rate of the company's historical and projected earnings per share is 3.3%. On this basis, the company's PEG ratio is 4.36, which suggests that it is overpriced.
On the other hand, the market is potentially undervaluing Orange in terms of its book value because its P/B ratio is 1.1. In comparison, the sector average P/B ratio is 3.12. The company's shares are currently -16.7% below their Graham number, indicating that its shares have a margin of safety.
So why does Orange get a bad rating from most analysts despite its seemingly attractive valuation? One reason could be its worrying compound EPS growth rate of -5.3%.
| 2019-12-31 | 2020-12-31 | 2021-12-31 | 2022-12-31 | |
|---|---|---|---|---|
| Revenue (MM) | $42,238 | $42,270 | $42,522 | $43,471 |
| Revenue Growth | n/a | 0.08% | 0.6% | 2.23% |
| Gross Margins | 57.6% | 58.2% | 57.7% | 56.9% |
| Gross Margins Growth | n/a | 1.04% | -0.86% | -1.39% |
| Operating Margins | 14.0% | 13.5% | 10.4% | 13.4% |
| Operating Margins Growth | n/a | -3.57% | -22.96% | 28.85% |
| Net Margins | 7.12% | 11.41% | 0.55% | 4.94% |
| Net Margins Growth | n/a | 60.25% | -95.18% | 798.18% |
| Earnings Per Share | $1.02 | $1.71 | $0.0 | $0.82 |
| EPS Growth | n/a | 67.65% | -100.0% | n/a |
| Diluted Shares (MM) | 2,688 | 2,684 | 2,658 | 2,659 |
| Free Cash Flow (MM) | $1,737 | $4,151 | $2,415 | $2,458 |
| FCF Growth | n/a | 138.98% | -41.82% | 1.78% |
| Capital Expenditures (MM) | -$8,422 | -$8,546 | -$8,821 | -$8,777 |
| Net Debt / EBITDA | 2.25 | 2.08 | 2.65 | 2.59 |
