Today is Monday, January 20, 2020, and this is your daily oil stocks roundup. Today we're looking at the valuations of Alliance Resource Partners LP (NASDAQ: ARLP), Chesapeake Energy Corporation (NYSE: CHK), and Callon Petroleum (NYSE: CPE).
Alliance Resource Partners LP (NASDAQ: ARLP) is a $1.409 billion company today with a one-year return of -39.79%. 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 3.395 is 33.55% lower than the industry average of 5.109. 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.
Alliance Resource Partners LP's enterprise-value-to-free-cash-flow (EV/FCF) ratio of 8.987 is 21.44% lower than its industry average of 11.44. 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 Alliance Resource Partners LP has increased by 41.18% 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.
Alliance Resource Partners LP has scored favorably on 2 of our 3 valuation metrics. With this in mind, we believe the stock is a good value.
Chesapeake Energy Corporation (NYSE: CHK) is a $1.292 billion company today with a one-year return of -77.12%. 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 1.47 is 82.16% lower than the industry average of 8.242. That's good.
Chesapeake Energy Corporation's enterprise-value-to-free-cash-flow (EV/FCF) ratio of -19.14 is below. That's not good.
The debt-to-equity (D/E) ratio of Chesapeake Energy Corporation has decreased by 96.72% over the last year. That's good.
Chesapeake Energy Corporation has scored favorably on 2 of our 3 valuation metrics. With this in mind, we believe the stock is a good value.
Callon Petroleum (NYSE: CPE) is a $1.592 billion company today with a one-year return of -53.04%. 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 3.748 is 54.53% lower than the industry average of 8.242. That's good.
Callon Petroleum's enterprise-value-to-free-cash-flow (EV/FCF) ratio of -16.04 is below zero. That's not good.
The debt-to-equity (D/E) ratio of Callon Petroleum has increased by 4.76% 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.
To summarize, we believe Alliance Resource Partners LP (NASDAQ: ARLP) is a good value, Chesapeake Energy Corporation (NYSE: CHK) is a good value, and Callon Petroleum (NYSE: CPE) is a slightly overvalued.
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