Today we're going to take a closer look at large-cap Consumer Staples company Corteva, whose shares are currently trading at $47.75. 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!
A Lower P/B Ratio Than Its Sector Average but Trades Above Its Graham Number:
Corteva, Inc. operates in the agriculture business. The company belongs to the Consumer Staples sector, which has an average price to earnings (P/E) ratio of 24.36 and an average price to book (P/B) ratio of 4.29. In contrast, Corteva has a trailing 12 month P/E ratio of 30.4 and a P/B ratio of 1.29.
Corteva's PEG ratio is 1.81, 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.
Wider Gross Margins Than the Industry Average of 13.23%:
| 2019 | 2020 | 2021 | 2022 | 2023 | |
|---|---|---|---|---|---|
| Revenue (MM) | $13,846 | $14,217 | $15,655 | $17,455 | $17,531 |
| Gross Margins | 38% | 40% | 41% | 40% | 41% |
| Operating Margins | -2.0% | 5.0% | 15.0% | 8.0% | 10.0% |
| Net Margins | 0.0% | 5.0% | 12.0% | 7.0% | 6.0% |
| Net Income (MM) | $18 | $756 | $1,822 | $1,216 | $1,124 |
| Net Interest Expense (MM) | $215 | $212 | $1,348 | $79 | $167 |
| Depreciation & Amort. (MM) | $475 | $682 | $722 | $702 | $678 |
| Earnings Per Share | -$1.28 | $0.91 | $2.37 | $1.58 | $1.2999999999999998 |
| Diluted Shares (MM) | 750 | 751 | 742 | 724 | 697 |
| Capital Expenditures (MM) | $1,163 | $475 | $573 | $605 | $537 |
| Net Current Assets (MM) | -$4,323 | -$2,818 | -$1,175 | -$282 | -$521 |
| Long Term Debt (MM) | $0 | $0 | $0 | $0 | $0 |
| Net Debt / EBITDA | -11.05 | -0.63 | -0.4 | 0.1 | 0.19 |
Corteva has low leverage and growing revenues and decreasing reinvestment in the business. Additionally, the company's financial statements display wider gross margins than its peer group and a strong EPS growth trend. Furthermore, Corteva has average net margins with a positive growth rate.
