Today is Wednesday, January 29, 2020, and this is your daily energy stocks roundup. Today we’re looking at the valuations of Ovintiv (NYSE: OVV), Holly Energy Partners LP (NYSE: HEP), and Baytex Energy Corporation (NYSE: BTE).
Ovintiv (NYSE: OVV)
Ovintiv (NYSE: OVV) is a $4.245 billion company today with a one-year return of -74.12%. 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 2.679 is 67.07% lower than the industry average of 8.136. 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.
Ovintiv’s enterprise-value-to-free-cash-flow (EV/FCF) ratio of 32.57 is 23.51% higher than its industry average of 26.37. 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 Ovintiv has increased by 9.53% 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.
Ovintiv has scored favorably on 1 of our 3 valuation metrics. With this in mind, we believe the stock is slightly overvalued.
Holly Energy Partners LP (NYSE: HEP)
Holly Energy Partners LP (NYSE: HEP) is a $2.478 billion company today with a one-year return of -22.2%. 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 10.93 is 27.57% lower than the industry average of 15.09. That’s good.
Holly Energy Partners LP’s enterprise-value-to-free-cash-flow (EV/FCF) ratio of 14.88 is 63.87% lower than its industry average of 41.18. That’s good.
The debt-to-equity (D/E) ratio of Holly Energy Partners LP has increased by 16.23% over the last year. That’s not good.
Holly Energy Partners LP has scored favorably on 2 of our 3 valuation metrics. With this in mind, we believe the stock is a good value.
Baytex Energy Corporation (NYSE: BTE)
Baytex Energy Corporation (NYSE: BTE) is a $636.46 million company today with a one-year return of -30.67%. 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 5.32 is 55.07% lower than the industry average of 11.84. That’s good.
Baytex Energy Corporation’s enterprise-value-to-free-cash-flow (EV/FCF) ratio of 15.11 is 9.63% lower than its industry average of 16.72. That’s good.
The debt-to-equity (D/E) ratio of Baytex Energy Corporation has decreased by 2.74% over the last year. That’s good.
Baytex Energy Corporation has scored favorably on 3 of our 3 valuation metrics. With this in mind, we believe the stock is a great value.
To summarize, we believe Ovintiv (NYSE: OVV) is slightly overvalued, Holly Energy Partners LP (NYSE: HEP) is a good value, and Baytex Energy Corporation (NYSE: BTE) is a great value.
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