Equinor's 3.2x Earnings Multiple Flags Value Case
The Norwegian energy major trading at 3.2x earnings and a 2.20 intrinsic-value-to-price ratio screens as undervalued by The Acquirer's Multiple, with third-quarter results due Oct. 24.
Equinor ASA trades at an enterprise multiple of 3.2 times trailing earnings and an intrinsic-value-to-price ratio of 2.20, according to The Acquirer's Multiple, a value-investing research publication. The firm reported $113 billion in trailing twelve-month revenue, $31.82 billion in operating income, and $9.06 billion in net income.
The Acquirer's Multiple highlighted Equinor on its stock screener as a company that may be trading below conservative intrinsic value estimates. Equinor's operations span oil and natural gas production and renewable energy, and it remains a major supplier of natural gas to Europe.
The publication noted risks including lower oil and gas prices, geopolitical uncertainty, energy-transition spending, and commodity-market cyclicality. Equinor's low-cost offshore asset base and scale underpin profitability, the source said.
Norway's largest company has been a key supplier to European natural gas markets since Russia's invasion of Ukraine reduced pipeline flows from Gazprom. The company's operated fields in the Norwegian North Sea and Barents Sea produce about 2 million barrels of oil equivalent per day, giving it one of the lowest production costs among European majors.
Equinor generated roughly $15 billion in operating cash flow in the past twelve months, according to its financial statements, and held net debt of less than $10 billion. The balance sheet strength provides room for the company's $8 billion annual dividend and share buyback program, which management reaffirmed at its last quarterly update.
The valuation gap between Equinor and U.S. peers like Exxon Mobil and Chevron has widened over the past year. Equinor trades at about 3.5 times forward EBITDA, while the two American majors trade above 7 times, according to Bloomberg data. The spread partly reflects a structural discount applied by investors to European energy companies perceived to face heavier regulatory and energy-transition headwinds.
Equinor has committed to investing $23 billion in renewables and low-carbon energy by 2035, including offshore wind projects in the North Sea and the United States. Those investments have yet to generate meaningful earnings and represent a call option on future returns, analysts at BMO Capital Markets wrote in a note this month.
The company reports third-quarter earnings on Oct. 24. Consensus estimates compiled by Bloomberg call for adjusted net income of $2.2 billion, down from $2.8 billion in the same period last year, reflecting lower benchmark gas prices since the 2022 crisis peak.
Equinor carries an Alpha Score of 51 out of 100, labeled Mixed, reflecting a neutral composite across the factors the model tracks. The stock's EQNR stock page provides the full score breakdown.
The Acquirer's Multiple said the stock's combination of a 3.20 earnings multiple and a 2.20 IV/P ratio places it among the attractively valued companies on its screener.
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