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Energy Stocks Roundup 07/08/2020: ARCH, CLNE, BTE

Written by Samuel Taube
Posted July 8, 2020

Today is Wednesday, July 8, 2020, and this is your daily energy stocks roundup. Today we’re looking at the valuations of Arch Resources (NYSE: ARCH), Clean Energy Fuels Corporation (NASDAQ: CLNE), and Baytex Energy Corporation (NYSE: BTE).

Arch Resources (NYSE: ARCH)

Arch Resources (NYSE: ARCH) is a $428.24 million company today with a one-year return of -67.75%. 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 3.706 is 40.19% lower than the industry average of 6.196. 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. 

Arch Resources' enterprise-value-to-free-cash-flow (EV/FCF) ratio of 72.93 is 2347.32% higher than its industry average of 2.98. 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 Arch Resources has increased by 35.05% 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. 

Arch Resources has scored favorably on 1 of our 3 valuation metrics. With this in mind, we believe the stock is slightly overvalued.

Clean Energy Fuels Corporation (NASDAQ: CLNE)

Clean Energy Fuels Corporation (NASDAQ: CLNE) is a $598.76 million company today with a one-year return of -11.95%. 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 18.62 is 44.57% higher than the industry average of 12.88. That’s not good. 

Clean Energy Fuels Corporation's enterprise-value-to-free-cash-flow (EV/FCF) ratio of -43.47 is below zero. That’s not good. 

The debt-to-equity (D/E) ratio of Clean Energy Fuels Corporation has increased by 0.98% over the last year. That's not good. 

Clean Energy Fuels Corporation has scored favorably on 0 of our 3 valuation metrics. With this in mind, we believe the stock is very overvalued.

Baytex Energy Corporation (NYSE: BTE)

Baytex Energy Corporation (NYSE: BTE) is a $291.46 million company today with a one-year return of -64.29%. 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 15.35 is 110.42% higher than the industry average of 7.295. That’s not good. 

Baytex Energy Corporation's enterprise-value-to-free-cash-flow (EV/FCF) ratio of 7.837 is 50.40% lower than its industry average of 15.8. That’s good. 

The debt-to-equity (D/E) ratio of Baytex Energy Corporation has increased by 342.85% over the last year. That's not good. 

Baytex Energy 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 Arch Resources (NYSE: ARCH) is slightly overvalued, Clean Energy Fuels Corporation (NASDAQ: CLNE) is very overvalued, and Baytex Energy Corporation (NYSE: BTE) is slightly overvalued.

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