Today is Thursday, January 9, 2020, and this is your daily oil stocks roundup. Today we're looking at the valuations of Cabot Oil & Gas Corporation (NYSE: COG), Plains All American Pipeline LP (NYSE: PAA), and Parsley Energy (NYSE: PE).
Cabot Oil & Gas Corporation (NYSE: COG) is a $6.931 billion company today with a one-year return of -31%. 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 8.895 is 5.49% higher than the industry average of 8.432. 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.
Cabot Oil & Gas Corporation's enterprise-value-to-free-cash-flow (EV/FCF) ratio of 12.69 is 52.90% lower than its industry average of 26.94. 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 Cabot Oil & Gas Corporation has decreased by 10.26% 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.
Cabot Oil & Gas Corporation has scored favorably on 2 of our 3 valuation metrics. With this in mind, we believe the stock is a good value.
Plains All American Pipeline LP (NYSE: PAA) is a $13.66 billion company today with a one-year return of -20.82%. 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 5.112 is 66.83% lower than the industry average of 15.41. That's good.
Plains All American Pipeline LP's enterprise-value-to-free-cash-flow (EV/FCF) ratio of 13.65 is 67.34% lower than its industry average of 41.8. That's good.
The debt-to-equity (D/E) ratio of Plains All American Pipeline LP has decreased by 3.54% over the last year. That's good.
Plains All American Pipeline LP has scored favorably on 3 of our 3 valuation metrics. With this in mind, we believe the stock is a great value.
Parsley Energy (NYSE: PE) is a $5.833 billion company today with a one-year return of 0.05%. 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 19.6 is 132.45% higher than the industry average of 8.432. That's not good.
Parsley Energy's enterprise-value-to-free-cash-flow (EV/FCF) ratio of -23.6 is below zero. That's not good.
The debt-to-equity (D/E) ratio of Parsley Energy has decreased by 4.70% over the last year. That's good.
Parsley Energy 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 Cabot Oil & Gas Corporation (NYSE: COG) is a good value, Plains All American Pipeline LP (NYSE: PAA) is a great value, and Parsley Energy (NYSE: PE) is slightly overvalued.
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