- Hess Corporation (HES) currently trades below corporate and historical averages relative to Uniform earnings, with a 14.2x Uniform P/E (Fwd. V/E’).
- At these levels, markets are pricing in expectations for Uniform ROA to improve to 8%, accompanied by 3% Uniform asset growth.
- Meanwhile, analysts expect Uniform ROA to expand to 15% in 2023, along with 5% Uniform asset growth.
- If sustained going forward, these levels would imply significant potential equity upside for the firm. That said, this level of performance is likely unsustainable going forward given the highly cyclical nature of oil and gas pricing.
- Moreover, the firm’s most recent earnings call suggests management may have concerns about profitability, production levels, and oil field projects.
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