Today is Thursday, March 26, 2020, and this is your daily energy stocks roundup. Today we’re looking at the valuations of Renewable Energy Group (NASDAQ: REGI), Suncor Energy (NYSE: SU), and W&T Offshore (NYSE: WTI).
Renewable Energy Group (NASDAQ: REGI)
Renewable Energy Group (NASDAQ: REGI) is a $781.29 million company today with a one-year return of -10.13%. 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 2.289 is 60.78% lower than the industry average of 5.837. 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.
Renewable Energy Group’s enterprise-value-to-free-cash-flow (EV/FCF) ratio of -10.22 is below zero. That’s not 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 Renewable Energy Group has decreased by 38.05% 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.
Renewable Energy Group has scored favorably on 2 of our 3 valuation metrics. With this in mind, we believe the stock is a good value.
Suncor Energy (NYSE: SU)
Suncor Energy (NYSE: SU) is a $21.44 billion company today with a one-year return of -59.22%. 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 10.36 is 260.98% higher than the industry average of 2.87. That’s not good.
Suncor Energy’s enterprise-value-to-free-cash-flow (EV/FCF) ratio of 8.337 is 38.79% higher than its industry average of 6.007. Not a good sign.
The debt-to-equity (D/E) ratio of Suncor Energy has decreased by 9.28% over the last year. That’s good.
Suncor Energy has scored favorably on 1 of our 3 valuation metrics. With this in mind, we believe the stock is slightly overvalued.
W&T Offshore (NYSE: WTI)
W&T Offshore (NYSE: WTI) is a $256.42 million company today with a one-year return of -74.67%. 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 3.549 is 26.54% lower than the industry average of 4.831. That’s good.
W&T Offshore’s enterprise-value-to-free-cash-flow (EV/FCF) ratio of -11.39 is below zero. That’s not good.
The debt-to-equity (D/E) ratio of W&T Offshore has increased by 47.92% over the last year. That’s not good.
W&T Offshore 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 Renewable Energy Group (NASDAQ: REGI) is a good value, Suncor Energy (NYSE: SU) is slightly overvalued, and W&T Offshore (NYSE: WTI) is slightly overvalued.
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