Today is Friday, April 17, 2020, and this is your daily energy stocks roundup. Today we’re looking at the valuations of ConocoPhillips (NYSE: COP), Callon Petroleum (NYSE: CPE), and Enerplus Corporation (NYSE: ERF).
ConocoPhillips (NYSE: COP)
ConocoPhillips (NYSE: COP) is a $33.47 billion company today with a one-year return of -33.77%. 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 4.864 is 22.36% lower than the industry average of 6.265. 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.
ConocoPhillips’s enterprise-value-to-free-cash-flow (EV/FCF) ratio of 8.821 is 51.61% lower than its industry average of 18.23. 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 ConocoPhillips has decreased by 9.13% 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.
ConocoPhillips has scored favorably on 3 of our 3 valuation metrics. With this in mind, we believe the stock is a great value.
Callon Petroleum (NYSE: CPE)
Callon Petroleum (NYSE: CPE) is a $170.57 million company today with a one-year return of -94.15%. 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 1.654 is 73.60% lower than the industry average of 6.265. That’s good.
Callon Petroleum’s enterprise-value-to-free-cash-flow (EV/FCF) ratio of -20.46 is below zero. That’s not good.
The debt-to-equity (D/E) ratio of Callon Petroleum has increased by 103.19% over the last year. That’s not good.
Callon Petroleum has scored favorably on 1 of our 3 valuation metrics. With this in mind, we believe the stock is slightly overvalued.
Enerplus Corporation (NYSE: ERF)
Enerplus Corporation (NYSE: ERF) is a $373.91 million company today with a one-year return of -79.21%. 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 2.3 is 49.05% lower than the industry average of 4.514. That’s good.
Enerplus Corporation’s enterprise-value-to-free-cash-flow (EV/FCF) ratio of 8.268 is 23.38% higher than its industry average of 6.701. Not a good sign.
The debt-to-equity (D/E) ratio of Enerplus Corporation has increased by 18.35% over the last year. That’s not good.
Enerplus 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 ConocoPhillips (NYSE: COP) is a great value, Callon Petroleum (NYSE: CPE) is slightly overvalued, and Enerplus Corporation (NYSE: ERF) is slightly overvalued.
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