Vital Energy (VTLE, Financial) recently experienced a daily gain of 4.95%, yet over the past three months, the stock has seen a decline of 9.9%. With an impressive Earnings Per Share (EPS) of 30.58, investors are keen to understand if this performance aligns with the stock's intrinsic value. This article delves into whether Vital Energy (VTLE) is fairly valued in the market, considering its current price and financial metrics.
Read on as we explore the valuation analysis of Vital Energy (VTLE, Financial), providing insights into its financial health, growth prospects, and overall worth.
Company Introduction
Vital Energy is an independent energy company with a focus on acquiring, exploring, and developing oil and natural gas properties in the Permian Basin of West Texas. It operates as a single segment in exploration and production. The stock price of Vital Energy (VTLE, Financial) currently stands at $47.73, with a market cap of $1.70 billion. When compared to the GF Value of $50.94, it suggests that the stock is fairly valued. This comparison sets the stage for a detailed analysis of the company's intrinsic value, combining financial evaluation with key business insights.
Summarize GF Value
The GF Value is a unique measure of a stock's intrinsic value, calculated using historical trading multiples, a GuruFocus adjustment factor based on past performance and growth, and future business performance estimates. This valuation suggests that the stock price will typically oscillate around the GF Value Line. If the price is significantly above this line, the stock might be overvalued, indicating potentially poor future returns. Conversely, if the price is well below the line, the stock could be undervalued, pointing to potentially higher future returns.
Vital Energy (VTLE, Financial) appears fairly valued according to the GF Value, with its current price reflecting the company's market cap and business growth rate. The stock's fair valuation implies that its long-term return could closely track the rate of its business growth.
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Financial Strength
Investing in companies with robust financial strength is critical to minimize the risk of capital loss. Vital Energy's financial strength, with a cash-to-debt ratio of 0.29, is fair but not outstanding within the Oil & Gas industry. This ratio positions Vital Energy in a less favorable spot compared to 60.47% of its industry peers. With a GuruFocus financial strength rank of 5 out of 10, it's clear that the company's financial situation warrants careful consideration by investors.
Profitability and Growth
Profitability is a less risky indicator for investors, especially when it's consistent over time. Vital Energy has been profitable for 6 out of the past 10 years, with a strong operating margin that surpasses 86.46% of its industry counterparts. This level of profitability, coupled with revenues of $1.50 billion and an EPS of $30.58, indicates a solid performance potential.
Growth is also a pivotal factor in valuation, as it is closely linked to long-term stock performance. Vital Energy's average annual revenue growth of 16.3% ranks favorably within the Oil & Gas industry, although its 3-year average EBITDA growth rate is not as impressive.
ROIC vs WACC
Comparing a company's Return on Invested Capital (ROIC) to its Weighted Average Cost of Capital (WACC) is another method to assess profitability. Vital Energy's ROIC of 29.99 is significantly higher than its WACC of 9.34, indicating the company is generating value for its shareholders.
Conclusion
In conclusion, Vital Energy (VTLE, Financial) seems to be fairly valued in the market. Its financial condition and profitability are considered fair, with growth metrics that could be improved. For a more comprehensive understanding of Vital Energy's stock and financials, interested investors can view 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.
