Today is Friday, February 28, 2020, and this is your daily energy stocks roundup. Today we’re looking at the valuations of DMC Global (NASDAQ: BOOM), Canadian Natural Resources (NYSE: CNQ), and Ovintiv (NYSE: OVV).
DMC Global (NASDAQ: BOOM)
DMC Global (NASDAQ: BOOM) is a $531.16 million company today with a one-year return of -25.07%. 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 16.18 is 31.21% lower than the industry average of 23.52. That’s good. A company’s P/E ratio shows its price as a multiple of its earnings per share (EPS). A relatively low P/E ratio is generally an indicator that a company is undervalued.
DMC Global’s enterprise-value-to-free-cash-flow (EV/FCF) ratio of 13.7 is 5.19% lower than its industry average of 14.45. 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 DMC Global has decreased by 73.08% 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.
DMC Global has scored favorably on 3 of our 3 valuation metrics. With this in mind, we believe the stock is a great value.
Canadian Natural Resources (NYSE: CNQ)
Canadian Natural Resources (NYSE: CNQ) is a $29.45 billion company today with a one-year return of -11.12%. 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 9.805 is 9.48% higher than the industry average of 8.956. That’s not good.
Canadian Natural Resources’s enterprise-value-to-free-cash-flow (EV/FCF) ratio of 14.97 is 7.70% higher than its industry average of 13.9. Not a good sign.
The debt-to-equity (D/E) ratio of Canadian Natural Resources has increased by 9.38% over the last year. That’s not good.
Canadian Natural Resources has scored favorably on 0 of our 3 valuation metrics. With this in mind, we believe the stock is very overvalued.
Ovintiv (NYSE: OVV)
Ovintiv (NYSE: OVV) is a $2.811 billion company today with a one-year return of -69.58%. 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 1.774 is 81.30% lower than the industry average of 9.486. That’s good.
Ovintiv’s enterprise-value-to-free-cash-flow (EV/FCF) ratio of 27.53 is 49.62% higher than its industry average of 18.4. Not a good sign.
The debt-to-equity (D/E) ratio of Ovintiv has increased by 9.53% over the last year. That’s not good.
Ovintiv 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 DMC Global (NASDAQ: BOOM) is a great value, Canadian Natural Resources (NYSE: CNQ) is very overvalued, and Ovintiv (NYSE: OVV) 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.
