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Is the Woodside share price a better buy than its ASX energy peers?

The Woodside Petroleum Limited (ASX: WPL) share price has plunged 37% lower in 2020, but how does it stack up against its peers?

What do I need to know about Woodside?

Woodside is the largest Australian natural gas producer and a leader in the ASX energy sector. It hasn’t been the best year for oil and gas investors, with the Woodside share price plummeting to to $21.61 per share from highs of around $35 in January.

The coronavirus pandemic has hit ASX shares hard, however, the ongoing oil price war has arguably had a larger impact on ASX energy shares. While tensions between OPEC+ and Russia appear to be easing, the Woodside share price doesn’t look like it is bouncing back anytime soon.

The brinkmanship shown from leading world oil producers has created a supply glut and even briefly sent oil prices negative. These depressed prices don’t bode well for Woodside’s profitability or share price growth in FY 2020.

According to the ASX, Woodside has 954.36 million shares on issue, which currently gives the company a market capitalisation of $20.6 billion. While impressive, that’s a long way shy of its 2 January valuation of $32.9 billion.

The Woodside share price currently trades at a price to earnings (P/E) ratio of 40.76 with a dividend yield of 6.32%. It’s not easy to say whether an ASX share is good value in isolation, so let’s take a look at some other ASX energy shares right now.

How do Woodside compare to its competitors?

  Woodside Petroleum Limited (ASX: WPL) Santos Limited (ASX: STO) Oil Search Limited (ASX: OSH)
2020 share price change -37.91% -37.28% -56.23%
Market capitalisation $20.6 billion $10.9 billion $6.6 billion
P/E ratio 40.7 11.3 11.1
Dividend yield 6.3% 3.1% 4.3%

Table: Author’s own. Source: Google Finance,

Is the Woodside share price good value?

The table above paints a pretty dire picture of the ASX energy sector right now. Despite tough times, Woodside has almost double the market capitalisation of Santos and more than triple that of Oil Search.

While the Woodside share price is yielding 6.3% right now, I wouldn’t bank on that dividend given the tough conditions facing the sector right now.

The company’s shares are also trading at a P/E ratio nearly 4 times higher than its peers. That to me says that the Woodside share price is a touch overvalued, or at the very least, not a cheap buy at its current valuation.

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Motley Fool contributor Ken Hall has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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