What You May Have Missed About Duke Energy (DUK)

Today we're going to take a closer look at large-cap Utilities company Duke Energy, whose shares are currently trading at $90.64. We've been asking ourselves whether the company is under or over valued at today's prices... let's perform a brief value analysis to find out!

Duke Energy's Valuation Is in Line With Its Sector Averages:

Duke Energy Corporation, together with its subsidiaries, operates as an energy company 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, Duke Energy has a trailing 12 month P/E ratio of 18.6 and a P/B ratio of 1.48.

Duke Energy's PEG ratio is 2.78, 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.

Exceptional Profitability Overshadowed by Excessive Leverage:

2019-12-31 2020-12-31 2021-12-31 2022-12-31
Revenue (MM) $25,079 $23,868 $25,097 $28,768
Gross Margins 46.1% 48.5% 48.2% 45.1%
Operating Margins 22.8% 23.2% 22.8% 22.3%
Net Margins 14.94% 5.77% 15.57% 9.28%
Net Income (MM) $3,748 $1,377 $3,908 $2,669
Net Interest Expense (MM) -2,204 -2,162 -2,280 -2,439
Net Interest Expense (MM) -$2,204 -$2,162 -$2,280 -$2,439
Depreciation & Amort. (MM) -$4,548 -$4,705 -$4,990 -$5,086
Earnings Per Share $5.06 $1.72 $4.94 $4.88
EPS Growth n/a -66.01% 187.21% -1.21%
Diluted Shares (MM) 729 738 769 771
Free Cash Flow (MM) $8,209 $8,856 $8,290 $5,927
Capital Expenditures (MM) -$11,122 -$9,907 -$9,715 -$11,367
Net Current Assets (MM) -$101,724 -$104,522 -$108,511 -$113,053
Current Ratio 0.62 0.53 0.62 0.7
Long Term Debt (MM) $54,985 $55,625 $60,448 $67,061
Net Debt / EBITDA 5.53 7.8 5.87 7.1

Duke Energy has growing revenues and a flat capital expenditure trend and strong margins with a stable trend. Additionally, the company's financial statements display a steady stream of strong cash flows and wider gross margins than its peer group. However, the firm has a highly leveraged balance sheet. Finally, we note that Duke Energy has flat EPS growth.

The above analysis is intended for educational purposes only and was performed on the basis of publicly available data. It is not to be construed as a recommendation to buy or sell any security. Any buy, sell, or other recommendations mentioned in the article are direct quotations of consensus recommendations from the analysts covering the stock, and do not represent the opinions of Market Inference or its writers. Past performance, accounting data, and inferences about market position and corporate valuation are not reliable indicators of future price movements. Market Inference does not provide financial advice. Investors should conduct their own review and analysis of any company of interest before making an investment decision.