Today is Tuesday, March 17, 2020, and this is your daily energy stocks roundup. Today we’re looking at the valuations of Cenovus Energy (NYSE: CVE), Par Pacific Holdings (NYSE: PARR), and Falcon Minerals Corporation (NASDAQ: FLMN).
Cenovus Energy (NYSE: CVE)
Cenovus Energy (NYSE: CVE) is a $2.753 billion company today with a one-year return of -72.06%. 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 1.681 is 59.70% lower than the industry average of 4.171. 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.
Cenovus Energy’s enterprise-value-to-free-cash-flow (EV/FCF) ratio of 5.049 is 33.13% lower than its industry average of 7.55. 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 Cenovus Energy has decreased by 33.49% 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.
Cenovus Energy has scored favorably on 3 of our 3 valuation metrics. With this in mind, we believe the stock is a great value.
Par Pacific Holdings (NYSE: PARR)
Par Pacific Holdings (NYSE: PARR) is a $356.01 million company today with a one-year return of -58.82%. 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 9.137 is 31.87% higher than the industry average of 6.929. That’s not good.
Par Pacific Holdings’ enterprise-value-to-free-cash-flow (EV/FCF) ratio of 69.94 is 492.21% higher than its industry average of 11.81. Not a good sign.
The debt-to-equity (D/E) ratio of Par Pacific Holdings has increased by 30.75% over the last year. That’s not good.
Par Pacific Holdings has scored favorably on 0 of our 3 valuation metrics. With this in mind, we believe the stock is very overvalued.
Falcon Minerals Corporation (NASDAQ: FLMN)
Falcon Minerals Corporation (NASDAQ: FLMN) is a $218.35 million company today with a one-year return of -72.8%. 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 8.194 is 49.04% higher than the industry average of 5.498. That’s not good.
Falcon Minerals Corporation’s enterprise-value-to-free-cash-flow (EV/FCF) ratio of 11.31 is 20.30% lower than its industry average of 14.19. That’s good.
The debt-to-equity (D/E) ratio of Falcon Minerals Corporation has increased by 123.57% over the last year. That’s not good.
Falcon Minerals Corporation 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 Cenovus Energy (NYSE: CVE) is a great value, Par Pacific Holdings (NYSE: PARR) is very overvalued, and Falcon Minerals Corporation (NASDAQ: FLMN) is slightly overvalued.
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