Attractive P/E Ratio
Low Price-to-Sales Ratio
Strong Return on Equity
Healthy Profit Margins
Low Debt Levels
Good Liquidity Ratios
Strong Production Growth
High Organic Reserve Replacement Ratio
Significant Shareholder Returns
Optimized Capital Expenditures
Long-Cycle Project Growth
Moderate EV/EBITDA Ratio
Moderate Gross Profit Margin
Moderate Cash Ratio
Integration Challenges from Acquisition
Commodity Price Sensitivity
Overall, ConocoPhillips demonstrates strong business quality through operational excellence, significant shareholder returns, and effective management of their assets. However, integration challenges from recent acquisitions and sensitivity to commodity prices present potential risks. Future prospects are promising with optimized capital expenditures and expected cash flow growth from long-cycle projects.
Analysis Date: February 6, 2025
Last Updated: March 11, 2025
Trailing Twelve Months (TTM) values provide a view of the company's performance over the last year.
Benjamin Graham's value investing approach focuses on finding stocks with a significant margin of safety between their intrinsic value and market price.
Intrinsic Value
Estimated fair value based on Graham's formula
$304.18
Current Market Price: $93.23
IV/P Ratio: 3.26x (>1.0 indicates undervalued)
Margin of Safety
Gap between intrinsic value and market price
69.0%
Graham recommended a minimum of 20-30% margin of safety
Higher values indicate a greater potential discount to fair value
Graham Criteria Checklist
Benjamin Graham's value investing checklist for COP
Positive earnings (5+ years)
Dividend history (5+ years)
P/E ratio ≤ 20 (10.92)
P/B ratio ≤ 1.5 (1.56)
Current ratio ≥ 2.0 (1.29x)
Long-term debt < Net current assets (6.61x)
Margin of safety (69.0%)
COP does not meet all Graham criteria
Trailing Twelve Months (TTM) values provide a view of the company's performance over the last year.
The return on equity (ROE) of 17.30% indicates strong profitability and efficient use of equity capital.
The net profit margin of 16.73% and operating profit margin of 25.04% demonstrate effective cost management and strong profitability.
While the gross profit margin of 30.47% is decent, it suggests there may be room for improvement in cost management at the production level.
Profitability metrics measure a company's ability to generate earnings relative to its revenue, operating costs, and other relevant metrics. Higher values generally indicate better performance.
Return on Equity (ROE)
Measures how efficiently a company uses its equity to generate profits
17.30%
Higher values indicate better returns for shareholders
TTM (as of 2025-04-16)
Return on Assets (ROA)
Measures how efficiently a company uses its assets to generate profits
1.88%
Higher values indicate better asset utilization
TTM (as of 2025-04-16)
Gross Profit Margin
Percentage of revenue retained after accounting for cost of goods sold
30.47%
Higher values indicate better efficiency in production
TTM (as of 2025-04-16)
Net Profit Margin
Percentage of revenue retained after accounting for all expenses
16.73%
Higher values indicate better overall profitability
TTM (as of 2025-04-16)
With a debt-to-equity ratio of 0.38 and a debt-to-assets ratio of 19.81%, the company shows a strong balance sheet with manageable debt levels.
The current ratio of 1.29 and quick ratio of 1.14 indicate that the company is well-positioned to meet its short-term obligations.
The cash ratio of 0.46 suggests that while the company has liquidity, it may not have enough cash on hand to cover all short-term liabilities.
Financial health metrics assess a company's ability to meet its financial obligations and its overall financial stability.
Debt to Equity Ratio
Total debt divided by total equity
0.38x
Lower values indicate less financial leverage and risk
Less than 1.0 is conservative, 1.0-2.0 is moderate, >2.0 indicates high risk
Q4 2024
Current Ratio
Current assets divided by current liabilities
1.29x
Higher values indicate better short-term liquidity
Less than 1.0 is concerning, 1.0-2.0 is adequate, greater than 2.0 is good
Q4 2024
ConocoPhillips delivered a 4% production growth year over year, exceeding guidance, showing operational excellence across their portfolio. Specific growth rates included 5% in the lower 48 and 3% in Alaska and international operations.
The company achieved a preliminary organic reserve replacement ratio of 123% in 2024, with a three-year average of 131%, indicating strong resource management.
ConocoPhillips returned $9.1 billion to shareholders, representing 45% of cash from operations, significantly above their commitment of 30%. This highlights their strong cash flow management.
The integration of the Marathon acquisition resulted in over $400 million in transaction-related expenses, which could affect short-term profitability. Managing these costs will be crucial moving forward.
The company plans to reduce capital spending by over 15% year over year while still delivering low single-digit production growth, primarily due to synergies from the Marathon acquisition.
Significant long-cycle projects are expected to start generating cash flow starting in 2026, leading to an estimated $6 billion of incremental annual sustaining free cash flow relative to 2025.
The company's cash return strategy is highly dependent on commodity prices with a warning that lower oil prices could impact cash flows, despite their strong balance sheet.