Investors are constantly on the lookout for stocks that offer good value, and Vista Energy SAB de CV (VIST, Financial) presents an interesting case. With a significant daily gain of 13.16%, a three-month gain of 20.07%, and an impressive Earnings Per Share (EPS) of 3.52, the question arises: is Vista Energy SAB de CV (VIST) significantly overvalued? This article delves into the company's valuation to provide a clear answer. Read on for an insightful analysis of Vista Energy SAB de CV's financial health and intrinsic value.
Company Introduction
Vista Energy SAB de CV is an independent oil and gas entity, primarily engaged in the exploration of shale oil and gas, with key assets in Vaca Muerta. With operations across Argentina and Mexico, the company has made a name for itself in the industry. However, a closer look at its stock price compared to the GF Value—an estimation of fair value—suggests that the company's shares may not be trading at their ideal valuation. This disparity sets the stage for a deeper examination of Vista Energy SAB de CV's worth.
Summarize GF Value
The GF Value is a unique measure that reflects the intrinsic value of a stock by considering historical trading multiples, an adjustment factor based on the company's past performance and growth, and future business performance forecasts. The GF Value Line indicates the fair trading value of the stock. When a stock's price significantly exceeds the GF Value Line, it may be overvalued, suggesting poorer future returns. Conversely, a price well below the line could indicate undervaluation and the potential for higher returns.
Vista Energy SAB de CV's current share price of $30.09, with a market cap of $2.90 billion, appears significantly overvalued when evaluated against the GF Value of $15.88. This discrepancy implies that the stock's long-term return may not align with the company's future business growth, potentially leading to a lower than expected performance for investors.
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Financial Strength
Assessing a company's financial strength is crucial to mitigate the risk of capital loss. Factors such as the cash-to-debt ratio and interest coverage can provide insights into a company's financial robustness. Vista Energy SAB de CV's cash-to-debt ratio stands at 0.23, ranking below 66.73% of its peers in the Oil & Gas industry. With an overall financial strength rating of 6 out of 10, the company's financial health is deemed fair.
Profitability and Growth
Investing in profitable companies generally carries less risk, particularly when they show consistent profitability over time. A company with high profit margins is likely to perform better than one with low margins. Vista Energy SAB de CV has been profitable for 3 out of the past 10 years, with revenues of $1.10 billion and an Earnings Per Share (EPS) of $3.52 over the past 12 months. Its operating margin of 52.4% outperforms 92.91% of its industry counterparts. The company's profitability is rated as fair by GuruFocus.
Furthermore, growth is a pivotal factor in a company's valuation. Vista Energy SAB de CV's 3-year average annual revenue growth rate of 32.2% ranks above 84.03% of the companies in the Oil & Gas industry. The 3-year average EBITDA growth rate of 50.7% also ranks favorably, better than 84.06% of industry peers.
ROIC vs WACC
Comparing a company's Return on Invested Capital (ROIC) to its Weighted Average Cost of Capital (WACC) can further reveal its profitability. A higher ROIC than WACC indicates value creation for shareholders. Vista Energy SAB de CV's ROIC of 20.83 surpasses its WACC of 10.5, suggesting efficient cash flow generation relative to capital investment.
Conclusion
In summary, Vista Energy SAB de CV (VIST, Financial) seems to be significantly overvalued according to our analysis. While the company's financial condition and profitability are fair, its growth prospects appear strong, outpacing a large portion of the Oil & Gas industry. To gain a deeper understanding of Vista Energy SAB de CV's financials, interested investors can explore its 30-Year Financials here.
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This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
