Today is Thursday, April 2, 2020, and this is your daily energy stocks roundup. Today we’re looking at the valuations of NACCO Industries (NYSE: NC), Parsley Energy (NYSE: PE), and Ovintiv (NYSE: OVV).
NACCO Industries (NYSE: NC)
NACCO Industries (NYSE: NC) is a $183.83 million company today with a one-year return of -32.72%. 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 4.601 is 6.08% lower than the industry average of 4.899. 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.
NACCO Industries’ enterprise-value-to-free-cash-flow (EV/FCF) ratio of 2.921 is 29.75% lower than its industry average of 4.158. 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 NACCO Industries has increased by 95.91% 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.
NACCO Industries has scored favorably on 2 of our 3 valuation metrics. With this in mind, we believe the stock is a good value.
Parsley Energy (NYSE: PE)
Parsley Energy (NYSE: PE) is a $2.868 billion company today with a one-year return of -71.29%. 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 11.21 is 117.67% higher than the industry average of 5.15. That’s not good.
Parsley Energy’s enterprise-value-to-free-cash-flow (EV/FCF) ratio of -32.26 is below zero. That’s not good.
The debt-to-equity (D/E) ratio of Parsley Energy has decreased by 3.24% over the last year. That’s good.
Parsley Energy has scored favorably on 1 of our 3 valuation metrics. With this in mind, we believe the stock is slightly overvalued.
Ovintiv (NYSE: OVV)
Ovintiv (NYSE: OVV) is a $818.44 million company today with a one-year return of -92.81%. 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 4.2 is 18.45% lower than the industry average of 5.15. That’s good.
Ovintiv’s enterprise-value-to-free-cash-flow (EV/FCF) ratio of 25.34 is 85.23% higher than its industry average of 13.68. Not a good sign.
The debt-to-equity (D/E) ratio of Ovintiv has increased by 24.59% over the last year. That’s not good.
Ovintiv 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 NACCO Industries (NYSE: NC) is a good value, Parsley Energy (NYSE: PE) is slightly overvalued, and Ovintiv (NYSE: OVV) is slightly overvalued.
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