CONSOL Energy Inc (CEIX, Financial) has recently experienced a daily loss of -8.17%, yet it boasts a 3-month gain of 13.34%. With an impressive Earnings Per Share (EPS) of 19.99, investors are left pondering whether the stock is significantly overvalued. This article delves into the valuation analysis of CONSOL Energy, providing insights into whether its current market price reflects its true worth.
Company Introduction
CONSOL Energy Inc is a renowned producer and exporter of high-BTU bituminous thermal coal, operating longwall mining operations and export terminals on the Eastern seaboard. The company's primary activities encompass mining, preparation, and marketing of thermal coal, primarily sold to power generators. With a current stock price of $101.95 and a GF Value of $49.87, we are set to explore the depths of CONSOL Energy's valuation, juxtaposing its market price against an estimated fair value.
Summarize GF Value
The GF Value is a unique metric that determines the intrinsic value of a stock, factoring in historical trading multiples, a GuruFocus adjustment factor, and future business performance estimates. If a stock trades significantly above this line, it may be overvalued, and vice versa. Currently, CONSOL Energy (CEIX, Financial) is deemed significantly overvalued with a market cap of $3.20 billion. This assessment suggests that the long-term return on its stock could be lower than its future business growth.
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Financial Strength
Investors must scrutinize a company's financial strength to avoid potential capital loss. CONSOL Energy's cash-to-debt ratio of 1.13 places it below 59.89% of its peers in the Other Energy Sources industry. However, its financial strength is rated a robust 8 out of 10 by GuruFocus, indicating a strong balance sheet.
Profitability and Growth
CONSOL Energy's profitability is a critical aspect of its evaluation, having been profitable for 8 out of the past 10 years. With annual revenues of $2.50 billion and an operating margin surpassing 82.95% of its industry counterparts, the company's profitability is considered fair. However, its growth metrics, including a 3-year average annual revenue growth rate of 7.9%, rank below many of its industry rivals, signaling a need for a closer look at its expansion strategies.
ROIC vs. WACC
An effective way to gauge profitability is to compare a company's Return on Invested Capital (ROIC) against its Weighted Average Cost of Capital (WACC). With an ROIC of 28.93% against a WACC of 7.09%, CONSOL Energy is effectively creating value for its shareholders. This comparison is an essential indicator of the company's financial health and operational efficiency.
Conclusion
In summary, CONSOL Energy's stock appears to be significantly overvalued when considering the GF Value. Despite this, the company maintains a strong financial condition and fair profitability. However, its growth is not as competitive within the Other Energy Sources industry. For a deeper understanding of CONSOL Energy's financials, investors are encouraged to review its 30-Year Financials.
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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.
