PetroChina (SEHK:857): Assessing Current Valuation After Recent Share Price Movements

PetroChina (SEHK:857) shares have shifted gears in recent weeks, catching investor attention. The stock’s trajectory has shown some movement, offering a chance to re-examine how China’s energy giant is performing in a shifting market landscape.

See our latest analysis for PetroChina.

Over the past year, PetroChina’s share price has held steady, while its one-year total shareholder return stands at just 0.1 percent. This indicates limited momentum even as global energy markets remain in flux. The latest price shifts reflect balanced sentiment as investors weigh both the company’s long-term scale and recent challenges.

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This steadiness raises a crucial question for investors: Is PetroChina currently trading below its true value, or is the market already accounting for any future growth and leaving little upside from here?

Price-to-Earnings of 7.5x: Is it justified?

PetroChina is trading at a price-to-earnings (P/E) ratio of 7.5x, which signals a lower valuation than its industry peers based on profits. With a last close price of HK$7.14, the P/E suggests that the market may be skeptical about future growth, yet sees solid earnings power today.

The price-to-earnings ratio measures how much investors are willing to pay for each dollar of earnings. It is a popular yardstick for comparing companies in the same sector. For a traditional oil and gas business like PetroChina, this multiple helps gauge market confidence in the company’s ability to generate future profits amid industry volatility.

Looking at the broader industry, the Hong Kong Oil and Gas average P/E stands at 9.3x, while peer companies average 9.4x. This positions PetroChina as better value than the majority of its sector. Even when compared to an estimated fair P/E of 12x, the current valuation remains compelling and could signal potential upside if sentiment shifts.

Explore the SWS fair ratio for PetroChina

Result: Price-to-Earnings of 7.5x (UNDERVALUED)

However, slowing revenue and net income growth suggest headwinds remain, which could challenge the view that PetroChina is clearly undervalued at current levels.

Find out about the key risks to this PetroChina narrative.

Another View: Discounted Cash Flow Perspective

Looking beyond earnings ratios, our SWS DCF model points to PetroChina trading at a significant discount to its intrinsic value. The current share price is roughly 31% below our estimated fair value. This could indicate more upside than the multiples alone suggest. Is the market underpricing future cash flows, or are risks lurking beneath the surface?

Look into how the SWS DCF model arrives at its fair value.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out PetroChina for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover undervalued stocks based on their cash flows. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Build Your Own PetroChina Narrative

If you see things differently or prefer to dive into the data firsthand, you can assemble your own view in just a few minutes. Do it your way

A great starting point for your PetroChina research is our analysis highlighting 2 key rewards and 2 important warning signs that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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