Today is Thursday, April 23, 2020, and this is your daily energy stocks roundup. Today we're looking at the valuations of Baker Hughes (NYSE: BKR), QEP Resources (NYSE: QEP), and Green Plains Partners LP (NASDAQ: GPP).
Baker Hughes (NYSE: BKR) is a $13.98 billion company today with a one-year return of -51.17%. 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 49.82 is 228.63% higher than the industry average of 15.16. 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.
Baker Hughes' enterprise-value-to-free-cash-flow (EV/FCF) ratio of 11.13 is 19.23% higher than its industry average of 9.335. 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 Baker Hughes has decreased by 11.88% 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.
Baker Hughes has scored favorably on 1 of our 3 valuation metrics. With this in mind, we believe the stock is slightly overvalued.
QEP Resources (NYSE: QEP) is a $140.47 million company today with a one-year return of -94.72%. 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 7.11 is 17.97% higher than the industry average of 6.027. That's not good.
QEP Resources' enterprise-value-to-free-cash-flow (EV/FCF) ratio of -10.21 is below zero. That's not good.
The debt-to-equity (D/E) ratio of QEP Resources has increased by 3.44% over the last year. That's not good.
QEP Resources has scored favorably on 0 of our 3 valuation metrics. With this in mind, we believe the stock is very overvalued.
Green Plains Partners LP (NASDAQ: GPP) is a $103.99 million company today with a one-year return of -71.81%. 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 2.567 is 73.92% lower than the industry average of 9.842. That's good.
Green Plains Partners LP's enterprise-value-to-free-cash-flow (EV/FCF) ratio of 5.098 is 84.81% lower than its industry average of 33.57. That's good.
The debt-to-equity (D/E) ratio of Green Plains Partners LP has increased by 290.33% over the last year. That's not good.
Green Plains Partners LP has scored favorably on 2 of our 3 valuation metrics. With this in mind, we believe the stock is a good value.
To summarize, we believe Baker Hughes (NYSE: BKR) is slightly overvalued, QEP Resources (NYSE: QEP) is very overvalued, and Green Plains Partners LP (NASDAQ: GPP) is a good value.
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