Quick Update for HES Investors

Today we're going to take a closer look at large-cap Energy company Hess, whose shares are currently trading at $133.6. 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!

Hess Has Elevated P/B and P/E Ratios:

Hess Corporation, an exploration and production company, explores, develops, produces, purchases, transports, and sells crude oil, natural gas liquids (NGLs), and natural gas. 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, Hess has a trailing 12 month P/E ratio of 20.4 and a P/B ratio of 5.02.

Hess's PEG ratio is 3.4, 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.

Growing Revenues With a Flat Capital Expenditure Trend:

2019-12-31 2020-12-31 2021-12-31 2022-12-31
Revenue (MM) $6,495 $4,667 $7,473 $11,324
Gross Margins 45.4% 26.8% 60.8% 69.9%
Operating Margins 9.0% -8.4% 26.9% 35.2%
Net Margins -6.28% -66.27% 7.48% 19.63%
Net Income (MM) -$408 -$3,093 $559 $2,223
Net Interest Expense (MM) -380 -468 -481 -493
Net Interest Expense (MM) -$380 -$468 -$481 -$493
Depreciation & Amort. (MM) -$2,122 -$2,074 -$1,528 -$1,703
Earnings Per Share -$1.37 -$10.15 $1.81 $6.56
EPS Growth n/a -640.88% 117.83% 262.43%
Diluted Shares (MM) 301 305 309 307
Free Cash Flow (MM) -$1,187 -$864 $1,143 $1,219
Capital Expenditures (MM) -$2,829 -$2,197 -$1,747 -$2,725
Net Current Assets (MM) -$8,920 -$9,405 -$9,143 -$9,175
Current Ratio 1.26 1.9 1.42 1.72
Long Term Debt (MM) $7,142 $8,286 $7,941 $8,278
Net Debt / EBITDA 2.27 -11.81 1.84 1.09

Hess benefits from growing revenues and a flat capital expenditure trend, a pattern of improving cash flows, and wider gross margins than its peer group. The company's financial statements show a strong EPS growth trend and healthy leverage. Furthermore, Hess has average net margins with a positive growth rate and 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.