Investor Essentials for Koninklijke Philips Stock

Koninklijke Philips shares fell by -1.4% during the day's morning session, and are now trading at a price of $20.08. Is it time to buy the dip? To better answer that question, it's essential to check if the market is valuing the company's shares fairly in terms of its earnings and equity levels.

Koninklijke Philips's Valuation Is in Line With Its Sector Averages:

Koninklijke Philips N.V. operates as a health technology company in North America, the Greater China, and internationally. The company belongs to the Health Care sector, which has an average price to earnings (P/E) ratio of 30.21 and an average price to book (P/B) ratio of 4.08. In contrast, Koninklijke Philips has a trailing 12 month P/E ratio of -38.6 and a P/B ratio of 1.51.

When we divideKoninklijke Philips's P/E ratio by its expected five-year EPS growth rate, we obtain a PEG ratio of 0.76, which indicates that the market is undervaluing the company's projected growth (a PEG ratio of 1 indicates a fairly valued company). Your analysis of the stock shouldn't end here. Rather, a good PEG ratio should alert you that it may be worthwhile to take a closer look at the stock.

The Business Is Unprofitable and Its Balance Sheet Is Highly Leveraged:

2018 2019 2020 2021 2022 2023
Revenue (M) $18,121 $17,147 $17,313 $17,156 $17,827 $18,169
Gross Margins 47% 46% 45% 42% 40% 41%
Net Margins 6% 7% 7% 19% -9% -3%
Net Income (M) $1,097 $1,173 $1,195 $3,323 -$1,605 -$463
Net Interest Expense (M) $188 $196 $173 $159 $235 $277
Depreciation & Amort. (M) $1,089 $1,343 $1,462 $1,323 $1,602 $1,261
Diluted Shares (M) 914 891 905 870 881 906
Earnings Per Share $1.14 $1.25 $1.29 $3.5 -$1.75 -$0.51
EPS Growth n/a 9.65% 3.2% 171.32% -150.0% 70.86%
Total Debt (M) $3,427 $4,939 $5,705 $6,473 $7,270 $7,035
Net Debt / EBITDA 0.62 1.3 0.91 2.22 83.53 4.51
Current Ratio 1.21 1.36 1.45 1.39 1.29 1.2

Koninklijke Philips has slimmer gross margins than its peers, declining EPS growth, and a highly leveraged balance sheet. Koninklijke Philips has just enough current assets to cover current liabilities, as shown by its current ratio of 1.2.

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.