Today is Tuesday, February 4, 2020, and this is your daily energy stocks roundup. Today we’re looking at the valuations of VAALCO Energy (NYSE: EGY), Enerplus Corporation (NYSE: ERF), and Energy Transfer LP (NYSE: ET).
VAALCO Energy (NYSE: EGY)
VAALCO Energy (NYSE: EGY) is a $128.45 million company today with a one-year return of 17.11%. Let’s look at its price-to-earnings (P/E) ratio, its enterprise-value-to-free-cash-flow (EV/CF) ratio, and its debt-to-equity ratio to gauge whether or not it’s a good investment.
The company’s P/E ratio of 11.58 is 56.32% higher than the industry average of 7.408. That’s not good. A company’s P/E ratio shows its price as a multiple of its earnings per share (EPS). A relatively high P/E ratio is generally an indicator that a company is overvalued.
VAALCO Energy’s enterprise-value-to-free-cash-flow (EV/FCF) ratio of 2.729 is 88.98% lower than its industry average of 24.76. That’s good.
A company’s EV/FCF ratio measures its enterprise value (market cap adjusted for cash holdings and debt) against its free cash flow (how much money the company has after all of its cash outflows). A low EV/FCF ratio indicates that a company is performing efficiently, managing its debt well, and maintaining a strong cash position.
The debt-to-equity (D/E) ratio of VAALCO Energy has decreased by 100.00% over the last year. That’s good.
A company’s D/E ratio equals its total liabilities divided by its shareholder equity. It’s a measure of a company’s financial leverage. A declining D/E ratio indicates that a company is decreasing its debt burden over time, while a rising ratio indicates that a company is taking on more debt over time.
VAALCO Energy has scored favorably on 2 of our 3 valuation metrics. With this in mind, we believe the stock is a good value.
Enerplus Corporation (NYSE: ERF)
Enerplus Corporation (NYSE: ERF) is a $1.104 billion company today with a one-year return of -41.7%. Judging by its price-to-earnings (P/E) ratio, its enterprise-value-to-free-cash-flow (EV/CF) ratio, and its debt-to-equity ratio, is it a good investment?
The company’s P/E ratio of 3.816 is 54.79% lower than the industry average of 8.441. That’s good.
Enerplus Corporation’s enterprise-value-to-free-cash-flow (EV/FCF) ratio of 38.91 is 192.56% higher than its industry average of 13.3. Not a good sign.
The debt-to-equity (D/E) ratio of Enerplus Corporation has decreased by 15.72% over the last year. That’s good.
Enerplus Corporation has scored favorably on 2 of our 3 valuation metrics. With this in mind, we believe the stock is a good value.
Energy Transfer LP (NYSE: ET)
Energy Transfer LP (NYSE: ET) is a $34.85 billion company today with a one-year return of -14.89%. Is it a good value based on its price-to-earnings (P/E) ratio, its enterprise-value-to-free-cash-flow (EV/CF) ratio, and its debt-to-equity ratio?
The company’s P/E ratio of 10.47 is 29.54% lower than the industry average of 14.86. That’s good.
Energy Transfer LP’s enterprise-value-to-free-cash-flow (EV/FCF) ratio of 52.23 is 65.34% higher than its industry average of 31.59. Not a good sign.
The debt-to-equity (D/E) ratio of Energy Transfer LP has increased by 9.56% over the last year. That’s not good.
Energy Transfer LP has scored favorably on 1 of our 3 valuation metrics. With this in mind, we believe the stock is slightly overvalued.
To summarize, we believe VAALCO Energy (NYSE: EGY) is a good value, Enerplus Corporation (NYSE: ERF) is a good value, and Energy Transfer LP (NYSE: ET) is slightly overvalued.
Editor’s Note: Looking for a set of energy investments that are always a great value? Our research team tracks a lucrative set of evergreen oil ETFs in a free, continuously updated report. Simply enter your email below to claim your copy.
Our analysts have traveled the world over, dedicated to finding the best and most profitable investments in the global energy markets. All you have to do to join our Energy and Capital investment community is sign up for the daily newsletter below.
