ENEOS (Ticker Symbol: JXHGF) is a Japanese company, which has a duopoly over Japan’s energy market. ENEOS’s businesses include the exploration, importation, and refining of crude oil; the manufacture and sale of petroleum products, including fuels and lubricants; and other energy-related activities. ENEOS’s petroleum refining and marketing segment made up 84% of its 2019 revenue. As the demand for refined crude oil picks up post-pandemic, ENEOS’s profitability is likely to rebound. This week, I fundamentally analyze ENEOS’s stock. I review ENEOS’s operating segments, look at its key ratios, derive the intrinsic value using Discounted Cash Flow (DCF) analysis, and calculate the expected rate of return from this investment. Since this is a long video, please feel free to use the time stamps in the video if you only wish to watch certain topics.
I review various key ratios such as Revenue, Net Income, Shares outstanding, Dividends, Payout Ratio, Free Cash Flows (FCF), Financial Leverage, Current Ratio, Debt to Equity Ratio, Return on Equity (ROE), Days Sales Outstanding (DSO), Days Inventory, Payable Period, Cash Conversion Cycle, Inventory Turnover, etc.
After taking into account 2019’s free cash flow of $2,403 million figure, a 3% growth rate of FCF (growth for the next 10 years), 10% discount rate, 1% long term growth rate (growth from 10 year mark to perpetuity), 2,318 million shares outstanding, and $13,328 million of long term debt, the DCF analysis yields us an intrinsic value of $7.24 per share. Using the current stock price of about $3.58 per share, and taking into the shares outstanding and future projects of free cash flows, we get the expected rate of return of 15.5%.
0:31 Company Profile / Operating Segments
2:29 Key Ratios Analysis
12:22 Discounted Cash Flow Analysis / Intrinsic Value
14:34 Expected Rate of Return Calculation
15:52 Summary / Conclusion
ENEOS’s Website: here
Morningstar Key Ratios Link: here.
Useful Resources here.
ENEOS Holdings, Inc. is a Japanese petroleum and metals conglomerate headquartered in Tokyo, Japan. In 2012 the multinational corporation consisted of 24,691 employees worldwide and, as of March 2013, JX Holdings was the forty third largest company in the world by revenue.
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