04 August 2008

COP: Financial Analysis through June 2008 (Update)

The preliminary second-quarter financial statements of integrated oil and gas behemoth ConocoPhillips (NYSE: COP) included a plethora of data about the company's businesses, but (as usual) it did not include a current Balance Sheet.   When we analyzed these results, we assumed that the Balance Sheet did not change between 31 March 2008 and 30 June 2008. 

We now have the latest Balance Sheet, and much other useful information, in the 10-Q report ConocoPhillips submitted to the SEC.  We updated our analysis to address the data in the 10-Q.

The GCFR gauge scores only changed slightly from the pre-10-Q analysis, as can be seen below:

  • Overall: 26 of 100 (down from 27)

The data in the 10-Q did not change the result of our examination of ConocoPhillips's second-quarter Income Statement.

The updated Balance Sheet did change the values for some of the Cash Management metrics.  The latest figures are listed below:

3 mos.
12 mos.
Current Ratio1.00.91.0
LTD/Equity 23.3%23.6%25.6%
Debt/CFO 0.9 yrs0.9 yrs1.0 yrs
Inventory/CGS N/A N/A N/A
Finished Goods/Inventory N/A N/A N/A
Days of Sales Outstanding (DSO)28.2 days28.2 days27.5 days
Working Capital/Market Capitalization  -0.8%-1.8%0.3%
Cash Conversion Cycle Time-1.6 days-2.5 days-0.9 days

The GCFR standard practice is to compute the Value gauge metrics and score using the share price at the end of the quarter.  On 30 June, the closing price of Conoco shares was $94.39.  However, the share price subsequently slid dramatically, ending July at $81.62.

The following table shows how the big drop in the price per share affected the Value metrics:

31 July
30 June
31 March
30 June
P/E to S&P 500 average P/E 41%47%56%72%
Enterprise Value/Cash Flow (EV/CFO)
Value gauge score4010

Conoco's valuation ratios can be compared with other companies in the Major Integrated Oil & Gas industry.

No comments:

Post a Comment