A strong performer from today's morning trading session is Equinor ASA, whose shares rose 2.1% to $31.03 per share. For those of you thinking about investing in the stock, here is a brief value analysis of the stock using the company's basic fundamental ratios.
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 3.4 and a P/B ratio of 3.8.
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 |
| 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.
