A Short Intro for Equinor ASA Investors

We've been asking ourselves recently if the market has placed a fair valuation on Equinor ASA. Let's dive into some of the fundamental values of this large-cap Energy company to determine if there might be an opportunity here for value-minded investors.

A Very Low P/E Ratio but Trades Above Its Graham Number:

Equinor ASA, an energy company, engages in the exploration, production, transportation, refining, and marketing of petroleum and other forms of energy in Norway and internationally. The company belongs to the Energy sector, which has an average price to earnings (P/E) ratio of 7.54 and an average price to book (P/B) ratio of 1.68. In contrast, Equinor ASA has a trailing 12 month P/E ratio of 3.2 and a P/B ratio of 3.13.

Equinor ASA has moved -18.0% over the last year compared to 13.3% for the S&P 500 — a difference of -31.0%. Equinor ASA has a 52 week high of $42.53 and a 52 week low of $25.23.

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 $9.03
EPS Growth n/a -407.27% 255.62% 243.35%
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 ASA 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 ASA has a decent current ratio.

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.