Coterra Energy Inc (CTRA, Financial) has recently been in the spotlight, drawing interest from investors and financial analysts due to its robust financial stance. With shares currently priced at $26.56, Coterra Energy Inc has witnessed a daily gain of 1.94%, marked against a three-month change of 12.19%. A thorough analysis, underlined by the GF Score, suggests that Coterra Energy Inc is well-positioned for substantial growth in the near future.
Decoding the GF Score
The GF Score is a stock performance ranking system developed by GuruFocus using five aspects of valuation, which has been found to be closely correlated to the long-term performances of stocks by backtesting from 2006 to 2021. The stocks with a higher GF Score generally generate higher returns than those with a lower GF Score. Therefore, when picking stocks, investors should invest in companies with high GF Scores. The GF Score ranges from 0 to 100, with 100 as the highest rank.
Here is a breakdown of Coterra Energy Inc's GF Score:
- Financial strength rank: 7/10
- Profitability rank: 8/10
- Growth rank: 9/10
- GF Value rank: 10/10
- Momentum rank: 10/10
Each one of these components is ranked and the ranks also have positive correlation with the long term performances of stocks. The GF score is calculated using the five key aspects of analysis. Through backtesting, we know that each of these key aspects has a different impact on the stock price performance. Thus, they are weighted differently when calculating the total score. With high ranks in growth, GF value, and momentum, and slightly lower ranks in financial strength and profitability, GuruFocus assigned Coterra Energy Inc the GF Score of 93 out of 100, which signals the highest outperformance potential.
Understanding Coterra Energy Inc's Business
Coterra Energy Inc, with a market cap of $20.05 billion and sales of $7.76 billion, is an independent exploration and production company with operations in Appalachia, the Permian Basin, and Oklahoma. It was formed after the 2021 merger with Cabot and Cimarex. At year-end 2022, Coterra's proved reserves were 2.4 billion barrels of oil equivalent, with net production that year of approximately 633 million barrels of oil equivalent per day (of which 74% was natural gas). The company's operating margin stands at 51.8%, indicating a high level of operational efficiency.
Financial Strength Breakdown
According to the Financial Strength rating, Coterra Energy Inc's robust balance sheet exhibits resilience against financial volatility, reflecting prudent management of capital structure. The Interest Coverage ratio for Coterra Energy Inc stands impressively at 44.19, underscoring its strong capability to cover its interest obligations. This robust financial position resonates with the wisdom of legendary investor Benjamin Graham, who favored companies with an interest coverage ratio of at least 5. With a favorable Debt-to-Revenue ratio of 0.33, Coterra Energy Inc's strategic handling of debt solidifies its financial health.
Profitability Rank Breakdown
The Profitability Rank shows Coterra Energy Inc's impressive standing among its peers in generating profit. Coterra Energy Inc's Operating Margin has increased (62.17%) over the past five years, as shown by the following data: 2018: 35.97; 2019: 42.40; 2020: 20.19; 2021: 48.48; 2022: 58.33. Furthermore, Coterra Energy Inc's Gross Margin has seen a consistent rise over the past five years, as evidenced by the data: 2018: 46.62; 2019: 48.79; 2020: 29.40; 2021: 76.25; 2022: 84.37. This trend underscores the company's growing proficiency in transforming revenue into profit.
Growth Rank Breakdown
Ranked highly in Growth, Coterra Energy Inc demonstrates a strong commitment to expanding its business. The company's 3-Year Revenue Growth Rate is 31.8%, which outperforms better than 84.57% of 862 companies in the Oil & Gas industry. Moreover, Coterra Energy Inc has seen a robust increase in its earnings before interest, taxes, depreciation, and amortization (EBITDA) over the past few years. Specifically, the three-year growth rate stands at 38.4, and the rate over the past five years is 41.8. This trend accentuates the company's continued capability to drive growth.
Conclusion
Given Coterra Energy Inc's strong financial strength, profitability, and growth metrics, the GF Score highlights the firm's unparalleled position for potential outperformance. This analysis underscores the company's robust financial health and its potential to deliver substantial returns to investors. GuruFocus Premium members can find more companies with strong GF Scores using the following screener link: GF Score Screen
