Today, we delve into the financial performance and stock valuation of CVR Energy Inc (CVI, Financial), a leading petroleum refining and nitrogen fertilizer manufacturing company. With a daily loss of -5.91 % and a 3-month gain of 6.27%, coupled with an Earnings Per Share (EPS) of 5.26, CVR Energy (CVI) raises an intriguing question: is the stock fairly valued? In this comprehensive analysis, we will dissect CVR Energy's financials and market performance to provide an informed answer.
Unraveling CVR Energy Inc (CVI, Financial)
CVR Energy Inc is a holding company that engages in petroleum refining and nitrogen fertilizer manufacturing through its holdings in CVR Refining LP and CVR Partners, LP. Its refineries process a variety of crude oil, from heavy sour to light sweet, supplied through its wholly-owned gathering system and pipeline. The company's products are supplied directly to customers in close geographic proximity and at throughput terminals. Its customers include retailers, railroads, and farm cooperatives.
With a current stock price of $30.43 and a GF Value of $30.71, CVR Energy Inc (CVI, Financial) appears to be fairly valued. But to fully understand its intrinsic value, we need to delve deeper into the company's financial performance and market trends.
Understanding the GF Value
The GF Value is a unique measure of a stock's intrinsic value, calculated based on historical trading multiples, a GuruFocus adjustment factor, and future business performance estimates. The GF Value Line provides a reference for the stock's fair trading value. If the stock price significantly deviates from the GF Value Line, it indicates potential overvaluation or undervaluation.
For CVR Energy, with a market cap of $3.10 billion and a stock price of $30.43 per share, the GF Value indicates that the stock is fairly valued. This suggests that the long-term return of CVR Energy's stock is likely to be close to the rate of its business growth.
Assessing CVR Energy's Financial Strength
Companies with poor financial strength pose a high risk of permanent capital loss. Therefore, it's crucial to review a company's financial strength before investing. CVR Energy's cash-to-debt ratio of 0.47 ranks worse than 51.17% of 1026 companies in the Oil & Gas industry. With an overall financial strength score of 6 out of 10, CVR Energy exhibits fair financial stability.
Evaluating Profitability and Growth
Investing in profitable companies poses less risk, especially if they have demonstrated consistent profitability over the long term. CVR Energy has been profitable 9 out of the past 10 years, with an operating margin of 9.14%, which ranks better than 51.07% of 979 companies in the Oil & Gas industry. This indicates fair profitability.
Company growth is also a critical factor in valuation. CVR Energy's 3-year average annual revenue growth is 19.6%, ranking better than 69.53% of 860 companies in the Oil & Gas industry. However, its 3-year average EBITDA growth rate is 10.1%, ranking worse than 55.57% of 826 companies in the same industry, indicating fair growth.
ROIC vs WACC
Comparing a company's return on invested capital (ROIC) to its weighted average cost of capital (WACC) provides a measure of profitability. If the ROIC exceeds the WACC, the company is likely creating value for its shareholders. Over the past 12 months, CVR Energy's ROIC was 27.68 while its WACC was 10.55, indicating a positive value creation.
Conclusion
In conclusion, CVR Energy (CVI, Financial) appears to be fairly valued. The company exhibits fair financial strength and profitability, although its growth ranks worse than 55.57% of 826 companies in the Oil & Gas industry. For a more detailed financial overview of CVR Energy, you can check out its 30-Year Financials here.
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