Today is Tuesday, March 24, 2020, and this is your daily energy stocks roundup. Today we’re looking at the valuations of HollyFrontier Corporation (NYSE: HFC), Bonanza Creek Energy (NYSE: BCEI), and MRC Global (NYSE: MRC).
HollyFrontier Corporation (NYSE: HFC)
HollyFrontier Corporation (NYSE: HFC) is a $3.129 billion company today with a one-year return of -63.13%. 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 0.5233 is 35.43% lower than the industry average of 0.8104. 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.
HollyFrontier Corporation’s enterprise-value-to-free-cash-flow (EV/FCF) ratio of 4.082 is 62.13% lower than its industry average of 10.78. 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 HollyFrontier Corporation has increased by 0.81% 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.
HollyFrontier Corporation has scored favorably on 2 of our 3 valuation metrics. With this in mind, we believe the stock is a good value.
Bonanza Creek Energy (NYSE: BCEI)
Bonanza Creek Energy (NYSE: BCEI) is a $259.34 million company today with a one-year return of -51.4%. 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 0.2769 is 43.72% lower than the industry average of 0.492. That’s good.
Bonanza Creek Energy’s enterprise-value-to-free-cash-flow (EV/FCF) ratio of -8.927 is below zero. That’s not good.
The debt-to-equity (D/E) ratio of Bonanza Creek Energy has increased by 47.50% over the last year. That’s not good.
Bonanza Creek Energy has scored favorably on 1 of our 3 valuation metrics. With this in mind, we believe the stock is slightly overvalued.
MRC Global (NYSE: MRC)
MRC Global (NYSE: MRC) is a $356.57 million company today with a one-year return of -74.3%. 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 0.5554 is 24.23% lower than the industry average of 0.733. That’s good.
MRC Global’s enterprise-value-to-free-cash-flow (EV/FCF) ratio of 5.476 is 35.85% lower than its industry average of 8.536. That’s good.
The debt-to-equity (D/E) ratio of MRC Global has decreased by 15.40% over the last year. That’s good.
MRC Global has scored favorably on 3 of our 3 valuation metrics. With this in mind, we believe the stock is a great value.
To summarize, we believe HollyFrontier Corporation (NYSE: HFC) is a good value, Bonanza Creek Energy (NYSE: BCEI) is slightly overvalued, and MRC Global (NYSE: MRC) is a great value.
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