Today is Thursday, April 16, 2020, and this is your daily energy stocks roundup. Today we’re looking at the valuations of Equitrans Midstream Corporation (NYSE: ETRN), Montage Resources Corporation (NYSE: MR), and Exterran Corporation (NYSE: EXTN).
Equitrans Midstream Corporation (NYSE: ETRN)
Equitrans Midstream Corporation (NYSE: ETRN) is a $1.557 billion company today with a one-year return of -69.48%. 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 21 is 119.28% higher than the industry average of 9.577. 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.
Equitrans Midstream Corporation’s enterprise-value-to-free-cash-flow (EV/FCF) ratio of 1353.86 is 4021.34% higher than its industry average of 32.85. Not a good sign. 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 high EV/FCF ratio could indicate that a company is performing inefficiently, has too much debt, or is starved for cash.
The debt-to-equity (D/E) ratio of Equitrans Midstream Corporation has decreased by 7.65% 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.
Equitrans Midstream Corporation has scored favorably on 1 of our 3 valuation metrics. With this in mind, we believe the stock is slightly overvalued.
Montage Resources Corporation (NYSE: MR)
Montage Resources Corporation (NYSE: MR) is a $144.02 million company today with a one-year return of -70.15%. 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 5.432 is 13.30% lower than the industry average of 6.265. That’s good.
Montage Resources Corporation’s enterprise-value-to-free-cash-flow (EV/FCF) ratio of -8.121 is below zero. That’s not good.
The debt-to-equity (D/E) ratio of Montage Resources Corporation has decreased by 18.01% over the last year. That’s good.
Montage Resources Corporation has scored favorably on 2 of our 3 valuation metrics. With this in mind, we believe the stock is a good value.
Exterran Corporation (NYSE: EXTN)
Exterran Corporation (NYSE: EXTN) is a $175.11 million company today with a one-year return of -69.49%. 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 8.38 is 47.79% lower than the industry average of 16.05. That’s good.
Exterran Corporation’s enterprise-value-to-free-cash-flow (EV/FCF) ratio of -41.31 is below zero. That’s not good.
The debt-to-equity (D/E) ratio of Exterran Corporation has increased by 48.25% over the last year. That’s not good.
Exterran 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 Equitrans Midstream Corporation (NYSE: ETRN) is slightly overvalued, Montage Resources Corporation (NYSE: MR) is a good value, and Exterran Corporation (NYSE: EXTN) is slightly overvalued.
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