In the dynamic and fiercely competitive business environment, conducting a thorough analysis of companies is crucial for investors and industry enthusiasts. In this article, we will perform an extensive industry comparison, evaluating Diamondback Energy FANG in relation to its major competitors in the Oil, Gas & Consumable Fuels industry. By closely examining crucial financial metrics, market position, and growth prospects, we aim to offer valuable insights for investors and shed light on company's performance within the industry.
Diamondback Energy Background
Diamondback Energy is an independent oil and gas producer in the United States. The company operates exclusively in the Permian Basin. At the end of 2022, the company reported net proven reserves of 2 billion barrels of oil equivalent. Net production averaged about 386,000 barrels per day in 2022, at a ratio of 58% oil, 21% natural gas liquids, and 21% natural gas.
| Company | P/E | P/B | P/S | ROE | EBITDA (in billions) | Gross Profit (in billions) | Revenue Growth |
|---|---|---|---|---|---|---|---|
| Diamondback Energy Inc | 8.81 | 1.95 | 3.69 | 3.55% | $1.23 | $1.05 | -31.1% |
| ConocoPhillips | 12.14 | 3.19 | 2.34 | 4.67% | $5.62 | $3.84 | -41.63% |
| EOG Resources Inc | 9.15 | 3.01 | 3.17 | 6.01% | $2.89 | $4.09 | -36.84% |
| Pioneer Natural Resources Co | 10.85 | 2.70 | 3.08 | 5.02% | $2.14 | $1.55 | -34.9% |
| Hess Corp | 34.44 | 6.12 | 4.72 | 1.45% | $0.98 | $1.29 | -22.54% |
| Devon Energy Corp | 6.84 | 2.91 | 1.90 | 6.25% | $1.63 | $1.05 | -38.61% |
| Coterra Energy Inc | 7.48 | 1.77 | 2.97 | 1.64% | $0.68 | $0.8 | -53.93% |
| EQT Corp | 4.85 | 1.50 | 2.03 | -0.55% | $0.36 | $-0.12 | -74.67% |
| Marathon Oil Corp | 8.93 | 1.55 | 2.77 | 2.54% | $0.99 | $0.55 | -31.55% |
| Ovintiv Inc | 3.91 | 1.50 | 1.10 | 3.9% | $0.94 | $1.33 | -32.63% |
| APA Corp | 8.81 | 18.63 | 1.48 | 66.09% | $1.15 | $0.86 | -41.06% |
| Chesapeake Energy Corp | 2.10 | 1.14 | 1.11 | 3.78% | $0.92 | $0.1 | -59.45% |
| Antero Resources Corp | 6.49 | 1.25 | 1.42 | -1.21% | $0.1 | $-0.01 | -62.0% |
| Range Resources Corp | 5.18 | 2.50 | 2.10 | 0.88% | $0.16 | $0.09 | -64.97% |
| Southwestern Energy Co | 1.46 | 1.23 | 0.71 | 3.63% | $0.59 | $0.46 | -69.33% |
| Matador Resources Co | 8.55 | 2.29 | 2.86 | 4.95% | $0.45 | $0.28 | -32.4% |
| Murphy Oil Corp | 7.36 | 1.42 | 1.97 | 1.9% | $0.37 | $0.33 | -32.05% |
| Civitas Resources Inc | 6.41 | 1.45 | 2.09 | 2.74% | $0.42 | $0.25 | -42.63% |
| Chord Energy Corp | 3.35 | 1.47 | 1.84 | 4.51% | $0.43 | $0.3 | 15.54% |
| Permian Resources Corp | 10.37 | 1.61 | 2 | 2.29% | $0.42 | $0.3 | 31.89% |
| SM Energy Co | 4.77 | 1.52 | 1.98 | 4.59% | $0.37 | $0.24 | -44.81% |
| Denbury Inc | 10.62 | 2.84 | 3.45 | 4.05% | $0.14 | $0.13 | -31.84% |
| Magnolia Oil & Gas Corp | 6.79 | 2.70 | 3.15 | 5.59% | $0.21 | $0.2 | -42.17% |
| Northern Oil & Gas Inc | 2.80 | 2.86 | 2.03 | 13.62% | $0.35 | $0.19 | -23.81% |
| Average | 7.98 | 2.92 | 2.27 | 6.45% | $0.97 | $0.79 | -37.67% |
After thoroughly examining Diamondback Energy, the following trends can be inferred:
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At 8.81, the stock's Price to Earnings ratio significantly exceeds the industry average by 1.1x, suggesting a premium valuation relative to industry peers.
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Considering a Price to Book ratio of 1.95, which is well below the industry average by 0.67x, the stock may be undervalued based on its book value compared to its peers.
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The stock's relatively high Price to Sales ratio of 3.69, surpassing the industry average by 1.63x, may indicate an aspect of overvaluation in terms of sales performance.
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The company has a lower Return on Equity (ROE) of 3.55%, which is 2.9% below the industry average. This indicates potential inefficiency in utilizing equity to generate profits, which could be attributed to various factors.
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With higher Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of $1.23 Billion, which is 1.27x above the industry average, the company demonstrates stronger profitability and robust cash flow generation.
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The company has higher gross profit of $1.05 Billion, which indicates 1.33x above the industry average, indicating stronger profitability and higher earnings from its core operations.
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With a revenue growth of -31.1%, which surpasses the industry average of -37.67%, the company is demonstrating robust sales expansion and gaining market share.
Debt To Equity Ratio
The debt-to-equity (D/E) ratio is a measure that indicates the level of debt a company has taken on relative to the value of its assets net of liabilities.
Considering the debt-to-equity ratio in industry comparisons allows for a concise evaluation of a company's financial health and risk profile, aiding in informed decision-making.
When evaluating Diamondback Energy alongside its top 4 peers in terms of the Debt-to-Equity ratio, the following insights arise:
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In terms of the debt-to-equity ratio, Diamondback Energy has a lower level of debt compared to its top 4 peers, indicating a stronger financial position.
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This implies that the company relies less on debt financing and has a more favorable balance between debt and equity with a lower debt-to-equity ratio of 0.42.
Key Takeaways
The high PE ratio suggests that Diamondback Energy may be overvalued compared to its peers in the Oil, Gas & Consumable Fuels industry. The low PB ratio indicates that the company's stock price is relatively low compared to its book value. The high PS ratio suggests that investors are willing to pay a premium for the company's revenue. The low ROE indicates that Diamondback Energy's profitability is lower compared to its peers. The high EBITDA, gross profit, and revenue growth indicate strong financial performance for the company.
This article was generated by Benzinga's automated content engine and reviewed by an editor.
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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