Today is Thursday, May 14, 2020, and this is your daily energy stocks roundup. Today we're looking at the valuations of Par Pacific Holdings (NYSE: PARR), Targa Resources Corporation (NYSE: TRGP), and Brigham Minerals (NYSE: MNRL).
Par Pacific Holdings (NYSE: PARR) is a $417.98 million company today with a one-year return of -62.33%. 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 7.62 is 24.03% lower than the industry average of 10.03. 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.
Par Pacific Holdings' enterprise-value-to-free-cash-flow (EV/FCF) ratio of 14.29 is 41.98% lower than its industry average of 24.63. 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 Par Pacific Holdings has increased by 9.78% 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.
Par Pacific Holdings has scored favorably on 2 of our 3 valuation metrics. With this in mind, we believe the stock is a good value.
Targa Resources Corporation (NYSE: TRGP) is a $3.306 billion company today with a one-year return of -65.18%. 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 46.93 is 312.39% higher than the industry average of 11.38. That's not good.
Targa Resources Corporation's enterprise-value-to-free-cash-flow (EV/FCF) ratio of -19.45 is below zero. That's not good.
The debt-to-equity (D/E) ratio of Targa Resources Corporation has increased by 85.06% over the last year. That's not good.
Targa Resources Corporation has scored favorably on 0 of our 3 valuation metrics. With this in mind, we believe the stock is very overvalued.
Brigham Minerals (NYSE: MNRL) is a $725.23 million company today with a one-year return of -38.16%. 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 60.06 is 451.01% higher than the industry average of 10.9. That's not good.
Brigham Minerals' enterprise-value-to-free-cash-flow (EV/FCF) ratio of -4.308 is below zero. That's not good.
The debt-to-equity (D/E) ratio of Brigham Minerals has decreased by 100.00% over the last year. That's good.
Brigham Minerals 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 Par Pacific Holdings (NYSE: PARR) is a good value, Targa Resources Corporation (NYSE: TRGP) is very overvalued, and Brigham Minerals (NYSE: MNRL) is slightly overvalued.
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