It hasn't been a great morning session for ConocoPhillips investors, who have watched their shares sink by -1.9% to a price of $114.35. 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 Very Low P/E Ratio but Priced Beyond Its Margin of Safety:
ConocoPhillips explores for, produces, transports, and markets crude oil, bitumen, natural gas, liquefied natural gas (LNG), and natural gas liquids in the United States, Canada, China, Libya, Malaysia, Norway, the United Kingdom, and internationally. The company belongs to the Energy sector, which has an average price to earnings (P/E) ratio of 13.84 and an average price to book (P/B) ratio of 2.05. In contrast, ConocoPhillips has a trailing 12 month P/E ratio of 13.0 and a P/B ratio of 2.71.
ConocoPhillips's PEG ratio is 2.72, 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 but an Average Current Ratio:
| 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | |
|---|---|---|---|---|---|---|
| Revenue (M) | $38,727 | $36,670 | $18,784 | $45,828 | $78,494 | $56,141 |
| Operating Margins | 26% | 26% | -17% | 28% | 36% | 21% |
| Net Margins | 16% | 20% | -14% | 18% | 24% | 20% |
| Net Income (M) | $6,257 | $7,189 | -$2,701 | $8,079 | $18,680 | $10,957 |
| Net Interest Expense (M) | $735 | $778 | $806 | $884 | $805 | $780 |
| Depreciation & Amort. (M) | $5,956 | $6,090 | $5,521 | $7,208 | $7,504 | $8,270 |
| Diluted Shares (M) | 1,176 | 1,124 | 1,078 | 1,328 | 1,278 | 1,206 |
| Earnings Per Share | $5.32 | $6.4 | -$2.51 | $6.07 | $14.57 | $9.06 |
| EPS Growth | n/a | 20.3% | -139.22% | 341.83% | 140.03% | -37.82% |
| Avg. Price | $55.48 | $52.48 | $36.6 | $54.29 | $91.26 | $114.35 |
| P/E Ratio | 10.35 | 8.16 | -14.58 | 8.91 | 6.24 | 12.59 |
| Free Cash Flow (M) | $6,184 | $4,468 | $87 | $11,672 | $18,155 | $8,717 |
| CAPEX (M) | $6,750 | $6,636 | $4,715 | $5,324 | $10,159 | $11,248 |
| EV / EBITDA | 4.66 | 4.44 | 21.82 | 4.44 | 3.6 | 7.63 |
| Total Debt (M) | $14,968 | $14,895 | $15,369 | $19,934 | $16,643 | $18,937 |
| Net Debt / EBITDA | 0.57 | 0.63 | 5.2 | 0.75 | 0.29 | 0.67 |
| Current Ratio | 1.79 | 2.4 | 2.25 | 1.34 | 1.46 | 1.43 |
ConocoPhillips has growing revenues and increasing reinvestment in the business and generally positive cash flows. Additionally, the company's financial statements display positive EPS growth and healthy leverage levels. Furthermore, ConocoPhillips has decent operating margins with a stable trend and just enough current assets to cover current liabilities, as shown by its current ratio of 1.43.
