Today is Thursday, January 30, 2020, and this is your daily energy stocks roundup. Today we're looking at the valuations of SEACOR (NYSE: CKH), Diamond Offshore Drilling (NYSE: DO), and Apache Corporation (NYSE: APA).
SEACOR (NYSE: CKH) is a $766.41 million company today with a one-year return of -6.49%. 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 30.88 is 23.92% higher than the industry average of 24.92. 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.
SEACOR's enterprise-value-to-free-cash-flow (EV/FCF) ratio of 11.94 is 22.37% lower than its industry average of 15.38. 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 SEACOR has decreased by 47.68% 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.
SEACOR has scored favorably on 2 of our 3 valuation metrics. With this in mind, we believe the stock is a good value.
Diamond Offshore Drilling (NYSE: DO) is a $629.26 million company today with a one-year return of -57.34%. 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 194.52 is 4552.48% higher than the industry average of 4.181. That's not good.
Diamond Offshore Drilling's enterprise-value-to-free-cash-flow (EV/FCF) ratio of -8.477 is below zero. That's not good.
The debt-to-equity (D/E) ratio of Diamond Offshore Drilling has increased by 16.23% over the last year. That's not good.
Diamond Offshore Drilling has scored favorably on 0 of our 3 valuation metrics. With this in mind, we believe the stock is very overvalued.
Apache Corporation (NYSE: APA) is a $10.41 billion company today with a one-year return of -15.08%. 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 346.6 is 4160.08% higher than the industry average of 8.136. That's not good.
Apache Corporation's enterprise-value-to-free-cash-flow (EV/FCF) ratio of -71.76 is below zero. That's not good.
The debt-to-equity (D/E) ratio of Apache Corporation has increased by 23.84% over the last year. That's not good.
Apache Corporation 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 SEACOR (NYSE: CKH) is a good value, Diamond Offshore Drilling (NYSE: DO) is very overvalued, and Apache Corporation (NYSE: APA) is very overvalued.
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