With a daily gain of 4.02% and a 3-month gain of 4.57%, Euronav NV (EURN, Financial) has been catching the attention of investors. The company's Earnings Per Share (EPS) stands at 2.92, indicating a robust financial performance. But the question remains: Is the stock significantly undervalued? This article presents an in-depth valuation analysis to answer this question. Read on to uncover Euronav NV's intrinsic value.
Company Overview
Euronav NV owns and operates a fleet of vessels for international maritime shipping and storage of crude oil and petroleum products. It is organized into two segments: tankers and floating storage and offloading activities (FSO). The tankers segment, which generates the majority of revenue, operates crude oil tankers on international markets. The FSO segment conducts floating production, floating storage, and offloading operations for crude oil and petroleum products.
Currently priced at $16.31 per share, Euronav NV has a market cap of $3.30 billion. However, its GF Value, an estimation of fair value, stands at $24.95. This discrepancy suggests that the stock is significantly undervalued.
Understanding GF Value
The GF Value represents the current intrinsic value of a stock derived from our exclusive method. The GF Value Line on our summary page gives an overview of the fair value that the stock should be traded at. It is calculated based on three factors:
- Historical multiples (PE Ratio, PS Ratio, PB Ratio and Price-to-Free-Cash-Flow) that the stock has traded at.
- GuruFocus adjustment factor based on the company's past returns and growth.
- Future estimates of the business performance.
According to our calculations, Euronav NV is significantly undervalued. The company's stock is likely to deliver higher future returns due to its current undervaluation.
Link: These companies may deliver higher future returns at reduced risk.
Financial Strength
Investing in companies with poor financial strength has a higher risk of permanent loss of capital. Therefore, it's crucial to review the financial strength of a company before deciding to buy its stock. Euronav NV has a cash-to-debt ratio of 0.09, which is worse than 81.01% of 1027 companies in the Oil & Gas industry. GuruFocus ranks the overall financial strength of Euronav NV at 5 out of 10, indicating fair financial strength.
Profitability and Growth
Investing in profitable companies, especially those with consistent profitability over the long term, is less risky. Euronav NV has been profitable 6 out of the past 10 years. Over the past twelve months, the company had a revenue of $1.30 billion and Earnings Per Share (EPS) of $2.92. Its operating margin is 47.3%, which ranks better than 88.52% of 976 companies in the Oil & Gas industry. Overall, the profitability of Euronav NV is ranked 6 out of 10, indicating fair profitability.
Growth is a crucial factor in a company's valuation. The faster a company is growing, the more likely it is to be creating value for shareholders, especially if the growth is profitable. The 3-year average annual revenue growth rate of Euronav NV is 1.6%, which ranks worse than 67.79% of 857 companies in the Oil & Gas industry. The 3-year average EBITDA growth rate is 3.4%, which ranks worse than 64.85% of 825 companies in the Oil & Gas industry.
ROIC vs WACC
Comparing a company's return on invested capital (ROIC) to its weighted cost of capital (WACC) is another way to evaluate its profitability. Return on invested capital (ROIC) measures how well a company generates cash flow relative to the capital it has invested in its business. The weighted average cost of capital (WACC) is the rate that a company is expected to pay on average to all its security holders to finance its assets. If the ROIC is higher than the WACC, it indicates that the company is creating value for shareholders. Over the past 12 months, Euronav NV's ROIC was 16.01, while its WACC came in at 4.97.
Conclusion
Overall, Euronav NV (EURN, Financial) stock is believed to be significantly undervalued. The company's financial condition is fair, and its profitability is fair. Its growth ranks worse than 64.85% of 825 companies in the Oil & Gas industry. To learn more about Euronav NV stock, you can check out its 30-Year Financials here.
To find out the high-quality companies that may deliver above-average returns, please check out GuruFocus High Quality Low Capex Screener.
