Now trading at a price of $29.04, Equinor has moved -0.6% so far today.
Equinor returned losses of -14.1% last year, with its stock price reaching a high of $42.53 and a low of $25.23. Over the same period, the stock underperformed the S&P 500 index by -29.0%. As of April 2023, the company's 50-day average price was $28.21. Equinor, an energy company, engages in the exploration, production, transportation, refining, and marketing of petroleum and other forms of energy in Norway and internationally. Based in Stavanger, Norway, the large-cap Energy company has 21,936 full time employees. Equinor has offered a 3.4% dividend yield over the last 12 months.
Low Leverage Levels and Exceptional EPS Growth:
| 2019-12-31 | 2020-12-31 | 2021-12-31 | 2022-12-31 | |
|---|---|---|---|---|
| Revenue (MM) | $62,911 | $45,753 | $88,744 | $149,004 |
| Gross Margins | 32.1% | 20.8% | 47.2% | 59.6% |
| Operating Margins | 14.5% | -7.6% | 37.1% | 52.5% |
| Net Margins | 2.93% | -12.04% | 9.65% | 19.29% |
| Net Income (MM) | $1,843 | -$5,510 | $8,563 | $28,746 |
| Net Interest Expense (MM) | -704 | -836 | -657 | -157 |
| Net Interest Expense (MM) | -$704 | -$836 | -$657 | -$157 |
| Depreciation & Amort. (MM) | -$13,204 | -$15,235 | -$11,719 | -$6,391 |
| Earnings Per Share | $0.55 | -$1.69 | $2.63 | $9.15 |
| EPS Growth | n/a | -407.27% | 255.62% | 247.91% |
| Diluted Shares (MM) | 3,334 | 3,277 | 3,254 | 3,111 |
| Free Cash Flow (MM) | $3,545 | $1,910 | $20,776 | $26,378 |
| Capital Expenditures (MM) | -$10,204 | -$8,476 | -$8,040 | -$8,758 |
| Net Current Assets (MM) | -$52,127 | -$55,894 | -$45,595 | -$25,863 |
| Current Ratio | 1.27 | 1.62 | 1.6 | 1.78 |
| Long Term Debt (MM) | $24,945 | $32,338 | $27,404 | $24,141 |
| Net Debt / EBITDA | 1.03 | 2.66 | 0.5 | 0.17 |
Equinor benefits from exceptional EPS growth, low leverage, and growing revenues and decreasing reinvestment in the business. The company's financial statements show decent operating margins with a positive growth rate and generally positive cash flows. However, the firm has slimmer gross margins than its peers. Finally, we note that Equinor has a decent current ratio.
A Very Low P/E Ratio but Trades Above Its Graham Number:
Equinor has a trailing twelve month P/E ratio of 3.1, compared to an average of 7.54 for the Energy sector. Based on its EPS guidance of $6.14, the company has a forward P/E ratio of 4.6. According to the 62.0% compound average growth rate of Equinor's historical and projected earnings per share, the company's PEG ratio is 0.05. Taking the weighted average of the company's EPS CAGR and the broader market's 5-year projected EPS growth rate, we obtain a normalized growth rate of 11.4%. On this basis, the company's PEG ratio is 0.27. This suggests that its shares are undervalued. In contrast, Equinor is likely overvalued compared to the book value of its equity, since its P/B ratio of 3.17 is higher than the sector average of 1.68. The company's shares are currently trading 24.0% above their Graham number. Ultimately, Equinor's strong cash flows, decent earnings multiple, and healthy debt levels factor towards it being fairly valued, its elevated P/B ratio notwithstanding.
There's an Analyst Consensus of Strong Upside Potential for Equinor:
The 3 analysts following Equinor have set target prices ranging from $36.0 to $40.0 per share, for an average of $37.47 with a buy rating. As of April 2023, the company is trading -24.7% away from its average target price, indicating that there is an analyst consensus of strong upside potential.
The largest shareholder is Folketrygdfondet, whose 3% stake in the company is worth $3,079,949,943.
