It's been a great morning session for Duke Energy investors, who saw their shares rise 1.1% to a price of $117.06 per share. At these higher prices, is the company still fairly valued? If you are thinking about investing, make sure to check the company's fundamentals before making a decision.
a Very Low P/E Ratio but Priced at a Premium:
Duke Energy Corporation, together with its subsidiaries, operates as an energy company in the United States. The company belongs to the Utilities sector, which has an average price to earnings (P/E) ratio of 20.3 and an average price to book (P/B) ratio of 2.25. In contrast, Duke Energy has a trailing 12 month P/E ratio of 20.0 and a P/B ratio of 1.89.
Duke Energy's PEG ratio is 2.86, 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.
Exceptional Profitability Overshadowed by Excessive Leverage:
| 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | |
|---|---|---|---|---|---|---|
| Revenue (M) | $24,521 | $25,079 | $23,366 | $24,621 | $28,768 | $29,060 |
| Operating Margins | 19% | 23% | 20% | 22% | 21% | 24% |
| Net Margins | 11% | 15% | 6% | 16% | 9% | 10% |
| Net Income (M) | $2,666 | $3,748 | $1,377 | $3,908 | $2,550 | $2,841 |
| Net Interest Expense (M) | $20 | $31 | $30 | $13 | $27 | $29 |
| Depreciation & Amort. (M) | $4,696 | $5,176 | $5,486 | $5,663 | $5,843 | $6,084 |
| Diluted Shares (M) | 708 | 729 | 738 | 769 | 770 | 771 |
| Earnings Per Share | $3.77 | $5.14 | $1.87 | $5.08 | $3.31 | $3.68 |
| EPS Growth | n/a | 36.34% | -63.62% | 171.66% | -34.84% | 11.18% |
| Avg. Price | $65.24 | $76.46 | $77.95 | $91.89 | $101.84 | $117.06 |
| P/E Ratio | 17.12 | 14.82 | 41.46 | 18.09 | 30.77 | 31.72 |
| Free Cash Flow (M) | -$2,203 | -$2,913 | -$1,051 | -$1,425 | -$5,440 | -$2,726 |
| CAPEX (M) | $9,389 | $11,122 | $9,907 | $9,715 | $11,367 | $12,604 |
| EV / EBITDA | 10.67 | 10.46 | 11.63 | 12.02 | 12.46 | 12.59 |
| Total Debt (M) | $54,879 | $58,629 | $60,023 | $63,919 | $69,796 | $75,680 |
| Net Debt / EBITDA | 5.8 | 5.36 | 5.94 | 5.7 | 5.85 | 5.73 |
| Current Ratio | 0.65 | 0.62 | 0.53 | 0.62 | 0.7 | 0.74 |
Duke Energy has negative cash flows, not enough current assets to cover current liabilities because its current ratio is 0.74, and a highly leveraged balance sheet. On the other hand, the company benefits from growing revenues and increasing reinvestment in the business and strong operating margins with a stable trend. Furthermore, Duke Energy has flat EPS growth.
