Today is Friday, January 17, 2020, and this is your daily oil stocks roundup. Today we're looking at the valuations of Helmerich & Payne (NYSE: HP), ConocoPhillips (NYSE: COP), and Viper Energy Partners LP (NASDAQ: VNOM).
Helmerich & Payne (NYSE: HP) is a $4.943 billion company today with a one-year return of -14.46%. 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 25.57 is 489.17% higher than the industry average of 4.34. 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.
Helmerich & Payne's enterprise-value-to-free-cash-flow (EV/FCF) ratio of 12.55 is 26.95% lower than its industry average of 17.18. 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 Helmerich & Payne has increased by 6.03% 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.
Helmerich & Payne has scored favorably on 1 of our 3 valuation metrics. With this in mind, we believe the stock is slightly overvalued.
ConocoPhillips (NYSE: COP) is a $71.5 billion company today with a one-year return of -0.9%. 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 8.865 is 5.24% higher than the industry average of 8.424. That's not good.
ConocoPhillips' enterprise-value-to-free-cash-flow (EV/FCF) ratio of 14.55 is 46.35% lower than its industry average of 27.12. That's good.
The debt-to-equity (D/E) ratio of ConocoPhillips has decreased by 9.57% over the last year. That's good.
ConocoPhillips has scored favorably on 2 of our 3 valuation metrics. With this in mind, we believe the stock is a good value.
Viper Energy Partners LP (NASDAQ: VNOM) is a $3.684 billion company today with a one-year return of -16.47%. 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 31.19 is 101.88% higher than the industry average of 15.45. That's not good.
Viper Energy Partners LP's enterprise-value-to-free-cash-flow (EV/FCF) ratio of -25.38 is below zero. That's not good.
The debt-to-equity (D/E) ratio of Viper Energy Partners LP has increased by 13.04% over the last year. That's not good.
Viper Energy Partners LP 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 Helmerich & Payne (NYSE: HP) is slightly overvalued, ConocoPhillips (NYSE: COP) is a good value, and Viper Energy Partners LP (NASDAQ: VNOM) is very overvalued.
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