CONSOL Energy Inc (CEIX, Financial) has recently experienced a daily loss of 12.25%, although it has gained 26.23% over the last three months. With an Earnings Per Share (EPS) of 21.13, the question arises: Is the stock significantly overvalued? The following valuation analysis seeks to answer this question and provide a comprehensive understanding of the company's financial health, profitability, and growth prospects.
Introducing CONSOL Energy Inc (CEIX, Financial)
CONSOL Energy Inc is a leading producer and exporter of high-BTU bituminous thermal coal. The company operates longwall mining operations nationwide and owns export terminals on the Eastern seaboard. The primary activity involves mining, preparation, and marketing of thermal coal, sold predominantly to power generators. The company's operating segments include PAMC (Pennsylvania Mining Complex), CONSOL Marine Terminal, and others. The PAMC segment generates the majority of the company's revenue.
With a stock price of $89.66, CONSOL Energy's market cap stands at $2.90 billion. This figure significantly surpasses the company's GF Value, a proprietary measure of a stock's fair value, at $44.85, indicating potential overvaluation.
Understanding the GF Value
The GF Value is a proprietary measure that represents the current intrinsic value of a stock. It is derived from historical trading multiples, a GuruFocus adjustment factor based on the company's past returns and growth, and future business performance estimates. The GF Value Line on our summary page gives an overview of the fair value that the stock should be traded at.
CONSOL Energy (CEIX, Financial) appears to be significantly overvalued according to the GF Value. The stock's current price of $89.66 per share significantly surpasses the GF Value of $44.85, indicating potential overvaluation. As a result, the long-term return of its stock is likely to be much lower than its future business growth.
Financial Strength Analysis
Before investing in a company, it's crucial to assess its financial strength. Companies with poor financial strength pose a higher risk of permanent loss to investors. Key indicators of financial strength include the cash-to-debt ratio and interest coverage. CONSOL Energy has a cash-to-debt ratio of 1.16, which is lower than 61.49% of 174 companies in the Other Energy Sources industry. Despite this, the overall financial strength of CONSOL Energy is 8 out of 10, indicating strong financial health.
Profitability and Growth
Companies that have been consistently profitable over the long term offer less risk for investors. CONSOL Energy has been profitable 8 over the past 10 years. Over the past twelve months, the company had a revenue of $2.50 billion and Earnings Per Share (EPS) of $21.13. Its operating margin is 35.34%, which ranks better than 83.59% of 128 companies in the Other Energy Sources industry. Overall, the profitability of CONSOL Energy is ranked 6 out of 10, indicating fair profitability.
Growth is one of the most important factors in the valuation of a company. The average annual revenue growth of CONSOL Energy is 7.9%, which ranks lower than 75.42% of 118 companies in the Other Energy Sources industry. The 3-year average EBITDA growth is 20%, which ranks lower than 63.24% of 136 companies in the Other Energy Sources industry.
Another way to assess the profitability of a company is to compare its return on invested capital and the weighted cost of capital. 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. For the past 12 months, CONSOL Energy's return on invested capital is 30.6, and its cost of capital is 10.21.
Conclusion
In conclusion, the stock of CONSOL Energy (CEIX, Financial) appears to be significantly overvalued. The company's financial condition is strong, and its profitability is fair. However, its growth ranks lower than 63.24% of 136 companies in the Other Energy Sources industry. To learn more about CONSOL Energy stock, you can check out its 30-Year Financials here.
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This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
