Cabot’s oil and gas stock gives Ev
Cabot Oil & Gas (NYSE: COG, 30-year Financials) stock appears to be slightly undervalued, according to GuruFocus Value’s calculation. The GuruFocus Value is GuruFocus’s estimate of the fair value at which the stock is to trade. It is calculated based on the historical multiples at which the stock has traded, the company’s past growth, and analysts’ estimates of the company’s future performance. If a share’s price is significantly above the GF value line, it is overvalued and its future performance may be poor. On the other hand, if it is significantly below the GF value line, its future return is likely to be higher. At its current price of $ 15.64 per share and market cap of $ 6.3 billion, Cabot Oil & Gas stock is showing signs of being slightly undervalued. The GF value for Cabot Oil & Gas is shown in the table below.
Since Cabot Oil & Gas is relatively undervalued, the long-term performance of its shares will likely outweigh the growth of its business.
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Companies with poor financial strength present investors with a high risk of permanent capital loss. To avoid a permanent loss of capital, an investor should do his research and consider the financial strength of a company before deciding to buy stocks. Both cash-to-debt ratio and covering a company’s interests are a great way to understand its financial strength. Cabot Oil & Gas has a cash-to-debt ratio of 0.16, which is worse than 69% of companies in the oil and gas industry. The overall financial strength of Cabot Oil & Gas is 5 out of 10, which indicates that the financial strength of Cabot Oil & Gas is fair. Here is Cabot Oil & Gas debt and cash flow over the past few years:
Companies that have historically been profitable over the long term pose less risk to investors who want to buy stocks. Higher profit margins usually dictate a better investment compared to a business with lower profit margins. Cabot Oil & Gas has been profitable 8 in the past 10 years. In the past twelve months, the company reported sales of $ 1.5 billion and earnings of $ 0.68 per share. His operating margin is 25.00%, which ranks better than 86% of companies in the oil and gas industry. Overall, Cabot Oil & Gas profitability is ranked 6 out of 10, indicating acceptable profitability. Here is Cabot Oil & Gas sales and net profit for the past few years:
One of the most important factors in the valuation of a business is growth. Long-term equity performance is closely linked to growth, according to GuruFocus research. Companies that grow faster create more shareholder value, especially if that growth is profitable. Cabot Oil & Gas’s average annual revenue growth is -1.1%, which ranks among the average for companies in the oil and gas industry. The 3-year average EBITDA growth is 23.6%, which ranks better than 76% of companies in the oil and gas industry.
One can also assess 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) The extent to which a business 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 should pay on average to all of its security holders to finance its assets. If the return on invested capital exceeds the weighted average cost of capital, the company is likely to create value for its shareholders. Over the past 12 months, Cabot Oil & Gas’s ROIC is 7.42 while its WACC is 2.13. Cabot Oil & Gas’ historical ROIC vs WACC comparison is shown below:
In conclusion, the share of Cabot Oil & Gas (NYSE: COG, 30-year Financials) would be slightly undervalued. The company’s financial position is fair and its profitability is fair. Its growth ranks better than 76% of companies in the oil and gas industry. To learn more about Cabot Oil & Gas stocks, you can view its 30-year financial data here.
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