As of July 18, 2023, Coterra Energy Inc (CTRA, Financial) has seen a notable price change of 3.68%, with its shares trading at $26.46. With a market cap of $20 billion, the company's current GF Value stands at $45.8, indicating that the stock appears to be significantly undervalued. Before delving deeper into the financial analysis, let's take a brief look at the company's operations and history.
Coterra Energy Inc, an independent exploration and production company, operates primarily in Appalachia, the Permian Basin, and Oklahoma. The company was established following a 2021 merger between Cabot and Cimarex. As of the end of 2022, Coterra's proven reserves were an impressive 2.4 billion barrels of oil equivalent. The company's net production for that year was approximately 633 million barrels of oil equivalent per day, with natural gas accounting for 74% of this production.
Understanding the GF Value of Coterra Energy (CTRA, Financial)
According to GuruFocus's valuation method, Coterra Energy's stock appears significantly undervalued. The GF Value, a unique indicator of a stock's intrinsic worth, is calculated based on historical trading multiples, an adjustment factor from GuruFocus based on past performance and growth, and estimates of future business performance. If the stock's share price is significantly below the GF Value Line, the stock may be undervalued and have high future returns. In the case of Coterra Energy, the GF Value suggests a promising investment opportunity.
Given that Coterra Energy is significantly undervalued, the long-term return of its stock is likely to be much higher than its business growth. For more companies that may deliver higher future returns at reduced risk, check out GuruFocus High Quality Low Capex Screener.
Financial Strength and Profitability of Coterra Energy (CTRA, Financial)
Investing in companies with poor financial strength carries a higher risk of permanent loss of capital. Therefore, it is crucial to review a company's financial strength before deciding to buy its stock. Coterra Energy's cash-to-debt ratio stands at 0.38, placing it below 58.08% of companies in the Oil & Gas industry. Despite this, GuruFocus ranks Coterra Energy's overall financial strength at 7 out of 10, indicating fair financial health.
Profitable companies, especially those with consistent profitability over the long term, pose less risk to investors. Coterra Energy has been profitable 8 out of the past 10 years. Over the past twelve months, the company had revenue of $9.1 billion and EPS of $5.22. Its operating margin is 58.52%, which ranks better than 92.33% of companies in the Oil & Gas industry. Overall, GuruFocus ranks Coterra Energy's profitability at 9 out of 10, indicating strong profitability.
Growth and Value Creation of Coterra Energy (CTRA, Financial)
Company growth is closely correlated with the long-term performance of a company’s stock. The faster a company is growing, the more likely it is to be creating value for shareholders, especially if the growth is profitable. Coterra Energy's 3-year average annual revenue growth rate is 31.8%, ranking it above 84.72% of companies in the Oil & Gas industry. The 3-year average EBITDA growth rate is 38.4%, which ranks better than 76.04% of companies in the same industry.
Another way to evaluate a company’s profitability is by comparing its return on invested capital (ROIC) to its weighted average cost of capital (WACC). Coterra Energy’s ROIC for the past 12 months is 22.86, while its WACC stands at 5.63. This indicates that the company is likely creating value for its shareholders.
Conclusion
In conclusion, Coterra Energy (CTRA, Financial) appears to be a significantly undervalued investment opportunity. The company's financial condition is fair, its profitability is strong, and its growth ranks better than 76.04% of companies in the Oil & Gas industry. For more detailed insights into Coterra Energy's financials, check out its 30-Year Financials here.
