ConocoPhillips Is Grossly Undervalued

Feb. 8.12 | About: ConocoPhillips (COP)

In my earlier articles, I examined two other oil companies and demonstrated how Exxon Mobil (NYSE:XOM) and Chevron (NYSE:CVX) were undervalued. Well, those stocks are still slightly undervalued, but there is one oil stock that is grossly undervalued. I am talking about ConocoPhillips (NYSE:COP). No matter which metric you look at, this stock is grossly undervalued.

Stock Price Appreciation

In the last 10 years, ConocoPhilips had a capital appreciation of 150%, up from $28 to $72. However, the company grew at a much faster rate than that in the last decade: (Click to enlarge)

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Stock Price vs. Free Cash Flow

Ten years ago, ConocoPhilips had a free cash flow of -$21 million. Today, the company's free cash flow is $4.60 billion. This is a huge growth. Compared to the stock's price appreciation, the company's free cash flow grew tremendously.

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Stock Price vs. Earnings Per Share

The company currently earns $2.56 per share, up from -14 cents 10 years ago. In the last decade, the company witnessed an EPS growth of 2000%, which is amazingly high. Compared to the EPS growth, the company's capital appreciation looks pretty flat in the last decade.

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Stock Price vs. Revenues

The company grew its revenues from $8.48 billion to $62.39 billion in the last decade. The revenue growth of 635% really overshadows the company's capital appreciation.

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Stock Price vs. Cash

A decade ago, the company held cash and equivalents totaling $170 million. Now the company's cash and equivalents holdings is valued at $5.78 billion. This is a growth of over 3,000% and makes the stock's capital appreciation look like a flat line.

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Stock Price vs. Book Value

In the last decade, the company's book value grew from $14.11 billion to $66.33 billion. This indicates a growth of 370%, far larger than the company's capital appreciation.

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Conclusion: ConocoPhilips is one of the best valued oil stocks out there and it is grossly undervalued.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.