It hasn't been a great afternoon session for Dominion Energy investors, who have watched their shares sink by -3.5% to a price of $46.22. Some of you might be wondering if it's time to buy the dip. If you are considering this, make sure to check the company's fundamentals first to determine if the shares are fairly valued at today's prices.
A Lower P/E Ratio Than Its Sector Average but Trades Above Its Graham Number:
Dominion Energy, Inc. produces and distributes energy 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, Dominion Energy has a trailing 12 month P/E ratio of 17.1 and a P/B ratio of 1.45.
When we divide Dominion Energy's P/E ratio by its expected EPS growth rate of the next five years, we obtain its PEG ratio of -3.99. Since it's negative, the company has negative growth expectations, and most investors will probably avoid the stock unless it has an exceptionally low P/E and P/B ratio.
Exceptional Profitability Overshadowed by Excessive Leverage:
| 2018-02-27 | 2019-02-28 | 2020-02-28 | 2021-02-25 | 2022-02-24 | 2023-02-21 | |
|---|---|---|---|---|---|---|
| Revenue (MM) | $12,586 | $11,199 | $14,401 | $14,172 | $13,964 | $17,174 |
| Gross Margins | 76.0% | 70.0% | 69.0% | 78.0% | 75.0% | 69.0% |
| Operating Margins | 30% | 25% | 20% | 28% | 24% | 24% |
| Net Margins | 24.0% | 22.0% | 9.0% | -3.0% | 24.0% | 6.0% |
| Net Income (MM) | $2,999 | $2,447 | $1,358 | -$401 | $3,288 | $994 |
| Net Interest Expense (MM) | -$1,205 | -$1,279 | -$1,486 | -$1,377 | -$1,354 | -$966 |
| Depreciation & Amort. (MM) | -$2,202 | -$2,280 | -$2,977 | -$2,836 | -$2,768 | -$3,113 |
| Earnings Per Share | $4.72 | $3.74 | $1.68 | -$0.48 | $4.06 | $1.23 |
| EPS Growth | n/a | -20.76% | -55.08% | -128.57% | 945.83% | -69.7% |
| Diluted Shares (MM) | 636 | 655 | 809 | 831 | 810 | 810 |
| Free Cash Flow (MM) | $10,411 | $6,636 | $10,078 | $11,558 | $10,098 | $10,731 |
| Capital Expenditures (MM) | -$5,909 | -$1,863 | -$4,874 | -$6,331 | -$6,061 | -$7,031 |
| Net Current Assets (MM) | -$52,881 | -$50,705 | -$63,694 | -$62,558 | -$63,403 | -$66,512 |
| Long Term Debt (MM) | $30,948 | $31,144 | $28,998 | $33,957 | $37,426 | $38,914 |
| Net Debt / EBITDA | 6.19 | 6.91 | 5.46 | 5.28 | 6.62 | 6.32 |
