Vista Energy SAB de CV (VIST, Financial) experienced a daily gain of 3.05% and a 3-month gain of 12.17%. With an Earnings Per Share (EPS) (EPS) of 3.35, the question arises: Is the stock significantly overvalued? This article provides an in-depth valuation analysis to answer this question. Stay with us as we explore the intrinsic value of Vista Energy SAB de CV (VIST).
Company Introduction
Vista Energy SAB de CV is an independent oil and gas company focused on shale oil and shale gas exploration at its main assets in Vaca Muerta. The company operates in Argentina and Mexico, focusing on the exploration and production of Crude oil, Natural gas, and LPG.
Given the current stock price of $26.04 and a GF Value of $15.38, Vista Energy SAB de CV appears to be significantly overvalued. Let's delve deeper into the company's value, starting with an overview of its income breakdown.
Understanding GF Value
The GF Value is a proprietary measure that represents the current intrinsic value of a stock. It is calculated based on historical multiples (PE Ratio, PS Ratio, PB Ratio, and Price-to-Free-Cash-Flow), a GuruFocus adjustment factor based on the company's past returns and growth, and future estimates of the business performance.
According to the GF Value, Vista Energy SAB de CV (VIST, Financial) is significantly overvalued. If the share price is significantly above the GF Value Line, the stock may be overvalued and have poor future returns. Conversely, if the share price is significantly below the GF Value calculation, the stock may be undervalued and have higher future returns.
Given that Vista Energy SAB de CV is significantly overvalued, the long-term return of its stock is likely to be much lower than its future business growth.
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Financial Strength
Investing in companies with low financial strength could result in permanent capital loss. Therefore, it's crucial to review a company's financial strength before deciding whether to buy shares. Looking at the cash-to-debt ratio and interest coverage can give a good initial perspective on the company's financial strength. Vista Energy SAB de CV has a cash-to-debt ratio of 0.31, which ranks worse than 60.49% of 1020 companies in the Oil & Gas industry. Based on this, GuruFocus ranks Vista Energy SAB de CV's financial strength as 6 out of 10, suggesting a fair balance sheet.
Profitability and Growth
Investing in profitable companies, especially those with consistent profitability over the long term, is less risky. A company with high profit margins is usually a safer investment than those with low profit margins. Vista Energy SAB de CV has been profitable 3 over the past 10 years. Over the past twelve months, the company had a revenue of $1.20 billion and Earnings Per Share (EPS) of $3.35. Its operating margin is 52.13%, which ranks better than 91.61% of 965 companies in the Oil & Gas industry. Overall, the profitability of Vista Energy SAB de CV is ranked 6 out of 10, which indicates fair profitability.
Growth is probably the most important factor in the valuation of a company. GuruFocus research has found that 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. The 3-year average annual revenue growth rate of Vista Energy SAB de CV is 32.2%, which ranks better than 84.81% of 849 companies in the Oil & Gas industry. The 3-year average EBITDA growth rate is 50.7%, which ranks better than 84.53% of 821 companies in the Oil & Gas industry.
One can also evaluate a company's profitability by comparing its return on invested capital (ROIC) to its weighted average cost of capital (WACC). Return on invested capital (ROIC) measures how well a company generates cash flow relative to the capital it has invested in its business. The weighted average cost of capital (WACC) is the rate that a company is expected to pay on average to all its security holders to finance its assets. If the return on invested capital exceeds the weighted average cost of capital, the company is likely creating value for its shareholders. During the past 12 months, Vista Energy SAB de CV's ROIC is 21.76 while its WACC came in at 9.35.
Conclusion
In conclusion, the stock of Vista Energy SAB de CV (VIST, Financial) is estimated to be significantly overvalued. The company's financial condition is fair, and its profitability is fair. Its growth ranks better than 84.53% of 821 companies in the Oil & Gas industry. To learn more about Vista Energy SAB de CV stock, you can check out its 30-Year Financials here.
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