When I went to do my July 2016 Undervalued Screen I couldn’t believe what I saw Chevron had a P/E of 150! It was then that I started looking at some of the other metrics that I care about:
- P/E – 150
- Operating Margin of .2 vs an industry average of 2;.1
- P/B was in line (1.3 vs 1.2)
- Payout Ratio of 620% – I am usually topping out at 60%
It is not my goal to sell any positions, but something is screaming at me! I am not sure how they justify increasing their dividend with a payout ratio that is already 6x the amount that they take in! If they cut their dividend and destroy their multi-decade growth record the stock is likely to take a significant hit.
I am in the midst of changing brokers (from fidelity to TD) so I can’t see my exact cost basis, but from old spreadsheets it looks like I am about even (not counting my reinvested dividends), so with that I think I am going to deploy my capital elsewhere as this stock is a bit too risky for my tastes!