With a daily gain of 5.35% and a 3-month gain of 20.86%, Vista Energy SAB de CV (VIST, Financial) seems to be performing well in the market. Its Earnings Per Share (EPS) (EPS) stands at 3.35. However, is this stock significantly overvalued? This article aims to answer this question through a detailed valuation analysis. Let's dive into the financials to see if Vista Energy SAB de CV (VIST) is a good investment or not.
Company Introduction
Vista Energy SAB de CV is an independent oil and gas company, primarily focused on shale oil and shale gas exploration at its main assets in Vaca Muerta. The company operates in Argentina and Mexico, with a single segment focusing on the exploration and production of Crude oil, Natural gas, and LPG. At the current price of $29.03 per share, Vista Energy SAB de CV has a market cap of $2.80 billion. However, our analysis suggests that the stock might be significantly overvalued.
Understanding the GF Value
The GF Value is a proprietary measure that represents the current intrinsic value of a stock. It is calculated based on historical trading multiples, a GuruFocus adjustment factor, and future business performance estimates. If the stock price is significantly above the GF Value Line, it is overvalued and its future return is likely to be poor. On the other hand, if it is significantly below the GF Value Line, its future return will likely be higher.
Based on the GF Value calculation, Vista Energy SAB de CV (VIST, Financial) appears to be significantly overvalued. This suggests that the long-term return of its stock is likely to be much lower than its future business growth.
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Financial Strength
It is always important to check the financial strength of a company before buying its stock. Investing in companies with poor financial strength have a higher risk of permanent loss. Looking at the cash-to-debt ratio and interest coverage is a great way to understand the financial strength of a company. Vista Energy SAB de CV has a cash-to-debt ratio of 0.31, which is worse than 60.64% of 1034 companies in the Oil & Gas industry. The overall financial strength of Vista Energy SAB de CV is 6 out of 10, which indicates that the financial strength of Vista Energy SAB de CV is fair.
Profitability and Growth
Companies that have been consistently profitable over the long term offer less risk for investors who may want to purchase shares. Higher profit margins usually dictate a better investment compared to a company with lower 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 92.07% of 984 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. A faster-growing company creates more value for shareholders, especially if the growth is profitable. The 3-year average annual revenue growth of Vista Energy SAB de CV is 32.2%, which ranks better than 84.8% of 862 companies in the Oil & Gas industry. The 3-year average EBITDA growth rate is 50.7%, which ranks better than 84.32% of 829 companies in the Oil & Gas industry.
ROIC vs 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. For the past 12 months, Vista Energy SAB de CV's return on invested capital is 21.76, and its cost of capital is 9.84.
Conclusion
In conclusion, the stock of Vista Energy SAB de CV (VIST, Financial) appears to be significantly overvalued. The company's financial condition is fair and its profitability is fair. Its growth ranks better than 84.32% of 829 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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