Today is Monday, May 4, 2020, and this is your daily energy stocks roundup. Today we’re looking at the valuations of Pembina Pipeline Corporation (NYSE: PBA), Montage Resources Corporation (NYSE: MR), and Earthstone Energy (NYSE: ESTE).
Pembina Pipeline Corporation (NYSE: PBA)
Pembina Pipeline Corporation (NYSE: PBA) is a $12.73 billion company today with a one-year return of -38.05%. 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 11.63 is 24.09% lower than the industry average of 15.32. 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.
Pembina Pipeline Corporation’s enterprise-value-to-free-cash-flow (EV/FCF) ratio of 33.02 is 45.14% lower than its industry average of 60.19. 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 Pembina Pipeline Corporation has increased by 15.63% 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.
Pembina Pipeline Corporation has scored favorably on 2 of our 3 valuation metrics. With this in mind, we believe the stock is a good value.
Montage Resources Corporation (NYSE: MR)
Montage Resources Corporation (NYSE: MR) is a $233.12 million company today with a one-year return of -33.13%. 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 0.2338 is 68.45% lower than the industry average of 0.7411. That’s good.
Montage Resources Corporation’s enterprise-value-to-free-cash-flow (EV/FCF) ratio of -9.029 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.
Earthstone Energy (NYSE: ESTE)
Earthstone Energy (NYSE: ESTE) is a $151.9 million company today with a one-year return of -65.66%. 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 117 is 1653.86% higher than the industry average of 6.671. That’s not good.
Earthstone Energy’s enterprise-value-to-free-cash-flow (EV/FCF) ratio of -10.01 is below zero. That’s not good.
The debt-to-equity (D/E) ratio of Earthstone Energy has increased by 108.79% over the last year. That’s not good.
Earthstone Energy has scored favorably on 0 of our 3 valuation metrics. With this in mind, we believe the stock is very overvalued.
To summarize, we believe Pembina Pipeline Corporation (NYSE: PBA) is a good value, Montage Resources Corporation (NYSE: MR) is a good value, and Earthstone Energy (NYSE: ESTE) is very overvalued.
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