It hasn't been a great afternoon session for Dominion Energy investors, who have watched their shares sink by -1.1% to a price of $52.5. Some of you might be wondering if it's time to buy the dip. If you are considering this, make sure to check the company's fundamentals first to determine if the shares are fairly valued at today's prices.
Dominion Energy's Valuation Is in Line With Its Sector Averages:
Dominion Energy, Inc. produces and distributes energy in the United States. The company belongs to the Utilities sector, which has an average price to earnings (P/E) ratio of 22.89 and an average price to book (P/B) ratio of 1.03. In contrast, Dominion Energy has a trailing 12 month P/E ratio of 36.5 and a P/B ratio of 1.65.
Dominion Energy's PEG ratio is 1.54, which shows that the stock is probably overvalued in terms of its estimated growth. For reference, a PEG ratio near or below 1 is a potential signal that a company is undervalued.
Increasing Revenues but Narrowing Margins:
| 2019-12-31 | 2020-12-31 | 2021-12-31 | 2022-12-31 | |
|---|---|---|---|---|
| Revenue (MM) | $16,572 | $14,172 | $13,964 | $17,174 |
| Gross Margins | 72.5% | 77.5% | 74.8% | 68.8% |
| Operating Margins | 15.9% | 14.5% | 21.6% | 9.3% |
| Net Margins | 8.74% | -2.83% | 23.55% | 5.79% |
| Net Income (MM) | $1,448 | -$401 | $3,288 | $994 |
| Net Interest Expense (MM) | -1,773 | -1,377 | -1,354 | -966 |
| Net Interest Expense (MM) | -$1,773 | -$1,377 | -$1,354 | -$966 |
| Depreciation & Amort. (MM) | -$2,977 | -$2,836 | -$2,768 | -$3,113 |
| Earnings Per Share | $1.73 | -$0.57 | $3.98 | $1.44 |
| EPS Growth | n/a | -132.95% | 798.25% | -63.82% |
| Diluted Shares (MM) | 838 | 831 | 810 | 836 |
| Free Cash Flow (MM) | $224 | -$793 | -$1,923 | -$3,891 |
| Capital Expenditures (MM) | -$4,980 | -$6,020 | -$5,960 | -$7,591 |
| Net Current Assets (MM) | -$63,702 | -$62,558 | -$65,013 | -$66,512 |
| Current Ratio | 0.61 | 0.64 | 0.84 | 0.73 |
| Long Term Debt (MM) | $33,719 | $33,957 | $37,426 | $38,914 |
| Net Debt / EBITDA | 5.72 | 9.46 | 5.14 | 8.86 |
Dominion Energy has declining EPS growth, negative and highly variable cash flows, and a highly leveraged balance sheet. On the other hand, the company benefits from stable revenues and increasing reinvestment in the business and wider gross margins than its peer group. Furthermore, Dominion Energy has average net margins with a negative growth trend.
