Today we're going to take a closer look at large-cap Industrials company Duke Energy, whose shares are currently trading at $98.31. 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:
Duke Energy Corporation, together with its subsidiaries, operates as an energy company in the United States. The company belongs to the Industrials sector, which has an average price to earnings (P/E) ratio of 22.19 and an average price to book (P/B) ratio of 4.06. In contrast, Duke Energy has a trailing 12 month P/E ratio of 20.8 and a P/B ratio of 1.61.
Duke Energy's PEG ratio is 2.75, 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 Increasing Reinvestment in the Business:
| 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | |
|---|---|---|---|---|---|---|
| Revenue (MM) | $24,521 | $25,079 | $23,366 | $24,621 | $28,768 | $29,199 |
| Revenue Growth | n/a | 2.28% | -6.83% | 5.37% | 16.84% | 1.5% |
| Operating Margins | 19% | 23% | 20% | 22% | 21% | 22% |
| Net Margins | 11% | 15% | 6% | 16% | 13% | 13% |
| Net Income (MM) | $2,666 | $3,748 | $1,377 | $3,908 | $3,778 | $3,829 |
| Net Interest Expense (MM) | $2,094 | $2,204 | $2,097 | $2,207 | $2,439 | $2,900 |
| Depreciation & Amort. (MM) | $4,696 | $5,176 | $5,486 | $5,663 | $5,843 | $5,967 |
| Diluted Shares (MM) | 708 | 729 | 738 | 769 | 770 | 772 |
| Free Cash Flow (MM) | -$2,203 | -$2,913 | -$1,051 | -$1,425 | -$5,440 | -$4,481 |
| Capital Expenditures (MM) | $9,389 | $11,122 | $9,907 | $9,715 | $11,367 | $12,529 |
| Current Ratio | 0.65 | 0.62 | 0.53 | 0.62 | 0.7 | 0.76 |
| Total Debt (MM) | $57,939 | $61,261 | $62,736 | $67,139 | $73,703 | $78,541 |
| Net Debt / EBITDA | 5.42 | 4.84 | 5.27 | 5.01 | 5.39 | 5.52 |
Duke Energy has weak operating margins with a stable trend, declining EPS growth, and a highly leveraged balance sheet. On the other hand, the company has growing revenues and increasing reinvestment in the business working in its favor.
