Today is Friday, March 20, 2020, and this is your daily energy stocks roundup. Today we’re looking at the valuations of Delek Logistics Partners LP (NYSE: DKL), Oasis Petroleum (NASDAQ: OAS), and Centennial Resource Development (NASDAQ: CDEV).
Delek Logistics Partners LP (NYSE: DKL)
Delek Logistics Partners LP (NYSE: DKL) is a $222.27 million company today with a one-year return of -77.68%. 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 3.487 is 64.04% lower than the industry average of 9.696. 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.
Delek Logistics Partners LP’s enterprise-value-to-free-cash-flow (EV/FCF) ratio of 8.29 is 66.55% lower than its industry average of 24.78. 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 Delek Logistics Partners LP has increased by 33.49% over the last year. That’s not 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.
Delek Logistics Partners LP has scored favorably on 2 of our 3 valuation metrics. With this in mind, we believe the stock is a good value.
Oasis Petroleum (NASDAQ: OAS)
Oasis Petroleum (NASDAQ: OAS) is a $123.09 million company today with a one-year return of -92.62%. 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 5.811 is 5.69% higher than the industry average of 5.498. That’s not good.
Oasis Petroleum’s enterprise-value-to-free-cash-flow (EV/FCF) ratio of 128.29 is 804.09% higher than its industry average of 14.19. Not a good sign.
The debt-to-equity (D/E) ratio of Oasis Petroleum has increased by 1.82% over the last year. That’s not good.
Oasis Petroleum has scored favorably on 0 of our 3 valuation metrics. With this in mind, we believe the stock is very overvalued.
Centennial Resource Development (NASDAQ: CDEV)
Centennial Resource Development (NASDAQ: CDEV) is a $141.29 million company today with a one-year return of -95.05%. 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 8.5 is 54.60% higher than the industry average of 5.498. That’s not good.
Centennial Resource Development’s enterprise-value-to-free-cash-flow (EV/FCF) ratio of -2.933 is below zero. That’s not good.
The debt-to-equity (D/E) ratio of Centennial Resource Development has increased by 45.45% over the last year. That’s not good.
Centennial Resource Development has scored favorably on 0 of our 3 valuation metrics. With this in mind, we believe the stock is very overvalued.
To summarize, we believe Delek Logistics Partners LP (NYSE: DKL) is a good value, Oasis Petroleum (NASDAQ: OAS) is very overvalued, and Centennial Resource Development (NASDAQ: CDEV) is very overvalued.
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