Venture Global (VG) shares have been on the move lately, catching the eye of investors curious about what is driving the change. The stock has dropped about 35% over the past month, drawing attention to recent shifts in sentiment.
See our latest analysis for Venture Global.
Looking beyond the past month’s 34.7% slide in share price, Venture Global’s momentum has been fading for most of 2024, with its year-to-date share price return down over 60%. While the latest moves may reflect shifting risk perceptions, it is part of a longer pattern where any short-term rallies have not built into sustained gains.
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With shares trailing well below their analyst price targets and annual revenue still showing solid growth, the question now is whether Venture Global is trading at a steep discount or if future prospects are already reflected in the market.
Venture Global is trading at a price-to-earnings (P/E) ratio of 17.9x. This places it at a premium compared to the industry average and its own fair ratio estimate. With a last close price of $9.49, investors are currently paying more for each dollar of earnings than is typical for similar U.S. oil and gas companies.
The price-to-earnings ratio captures how much the market is willing to pay for a company’s profits. It is a widely used tool for gauging whether a stock is trading at a reasonable level given its current and future earnings. For Venture Global, this elevated multiple suggests high expectations for profit growth, despite modest near-term earnings estimates and industry headwinds.
Compared to the U.S. oil and gas industry average P/E of 12.8x, Venture Global appears significantly more expensive. Its ratio also exceeds the estimated fair price-to-earnings level of 14.3x. This valuation gap signals the market may be overpricing future prospects, especially given the company’s current growth and profit profile.
Explore the SWS fair ratio for Venture Global
Result: Price-to-Earnings of 17.9x (OVERVALUED)
However, rising revenue growth could falter if industry conditions worsen or if profit improvements do not keep pace with expectations.
Find out about the key risks to this Venture Global narrative.
While the price-to-earnings ratio presents Venture Global as expensive compared to its peers, the SWS DCF model offers a different perspective. According to our DCF model, shares are trading approximately 31.6% below their estimated fair value of $13.88. Could the market be missing long-term fundamentals?