In This Article:
- By GF Value
The stock of DTE Energy Co (NYSE:DTE, 30-year Financials) is believed to be modestly overvalued, according to GuruFocus Value calculation. GuruFocus Value is GuruFocus' estimate of the fair value at which the stock should be traded. It is calculated based on the historical multiples that the stock has traded at, the past business growth and analyst estimates of future business performance. If the price of a stock is significantly above the GF Value Line, it is overvalued and its future return is likely to be poor. On the other hand, if it is significantly below the GF Value Line, its future return will likely be higher. At its current price of $133.53 per share and the market cap of $25.9 billion, DTE Energy Co stock is believed to be modestly overvalued. GF Value for DTE Energy Co is shown in the chart below.
Because DTE Energy Co is relatively overvalued, the long-term return of its stock is likely to be lower than its business growth.
Link: These companies may deliever higher future returns at reduced risk.
It is always important to check the financial strength of a company before buying its stock. Investing in companies with poor financial strength have a higher risk of permanent loss. Looking at the cash-to-debt ratio and interest coverage is a great way to understand the financial strength of a company. DTE Energy Co has a cash-to-debt ratio of 0.03, which is worse than 86% of the companies in the industry of Utilities - Regulated. The overall financial strength of DTE Energy Co is 4 out of 10, which indicates that the financial strength of DTE Energy Co is poor. This is the debt and cash of DTE Energy Co over the past years:
It is less risky to invest in profitable companies, especially those with consistent profitability over long term. A company with high profit margins is usually a safer investment than those with low profit margins. DTE Energy Co has been profitable 10 over the past 10 years. Over the past twelve months, the company had a revenue of $12.2 billion and earnings of $7.08 a share. Its operating margin is 16.91%, which ranks in the middle range of the companies in the industry of Utilities - Regulated. Overall, the profitability of DTE Energy Co is ranked 6 out of 10, which indicates fair profitability. This is the revenue and net income of DTE Energy Co over the past years:
Growth is probably one of the most important factors in the valuation of a company. GuruFocus' research has found that growth is closely correlated with the long-term performance of a company's stock. If a company's business is growing, the company usually creates value for its shareholders, especially if the growth is profitable. Likewise, if a company's revenue and earnings are declining, the value of the company will decrease. DTE Energy Co's 3-year average revenue growth rate is worse than 82% of the companies in the industry of Utilities - Regulated. DTE Energy Co's 3-year average EBITDA growth rate is 6.4%, which ranks in the middle range of the companies in the industry of Utilities - Regulated.