Today is Monday, March 23, 2020, and this is your daily energy stocks roundup. Today we’re looking at the valuations of Select Energy Services (NYSE: WTTR), Berry Corporation (NASDAQ: BRY), and Equitrans Midstream Corporation (NYSE: ETRN).
Select Energy Services (NYSE: WTTR)
Select Energy Services (NYSE: WTTR) is a $258.2 million company today with a one-year return of -75.37%. 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 62.5 is 368.87% higher than the industry average of 13.33. 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.
Select Energy Services’ enterprise-value-to-free-cash-flow (EV/FCF) ratio of 4.176 is 51.08% lower than its industry average of 8.536. 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 Select Energy Services 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.
Select Energy Services has scored favorably on 2 of our 3 valuation metrics. With this in mind, we believe the stock is a good value.
Berry Corporation (NASDAQ: BRY)
Berry Corporation (NASDAQ: BRY) is a $189.32 million company today with a one-year return of -79.89%. 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 4.491 is 7.04% lower than the industry average of 4.831. That’s good.
Berry Corporation’s enterprise-value-to-free-cash-flow (EV/FCF) ratio of 195.3 is 1370.63% higher than its industry average of 13.28. Not a good sign.
The debt-to-equity (D/E) ratio of Berry Corporation has increased by 4.16% over the last year. That’s not good.
Berry Corporation has scored favorably on 1 of our 3 valuation metrics. With this in mind, we believe the stock is slightly overvalued.
Equitrans Midstream Corporation (NYSE: ETRN)
Equitrans Midstream Corporation (NYSE: ETRN) is a $1.267 billion company today with a one-year return of -73.34%. 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 21 is 160.22% higher than the industry average of 8.07. That’s not good.
Equitrans Midstream Corporation’s enterprise-value-to-free-cash-flow (EV/FCF) ratio of 1341.96 is 5620.20% higher than its industry average of 23.46. Not a good sign.
The debt-to-equity (D/E) ratio of Equitrans Midstream Corporation has decreased by 7.65% over the last year. That’s good.
Equitrans Midstream 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 Select Energy Services (NYSE: WTTR) is a good value, Berry Corporation (NASDAQ: BRY) is slightly overvalued, and Equitrans Midstream Corporation (NYSE: ETRN) is slightly overvalued.
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