Karoon Energy (ASX:KAR) - Share price, News & Analysis

Q: What is the Fair Price of KAR when looking at its future cash flows? For this estimate we use a Discounted Cash Flow model.

KAR (A$1.74) is trading below our estimate of [[fair value]] (A$32.72)

KAR fundamental analysis
Snowflake Score
Valuation	5/6
Future Growth	6/6
Past Performance	0/6
Financial Health	4/6
Dividends	0/6

KAR Stock Overview

Karoon Energy Ltd operates as an oil and gas exploration and production company in Australia, Brazil, and Peru.

Rewards

Trading at 94.7% below our estimate of its fair value

Earnings are forecast to grow 93.54% per year

Risk Analysis

No risks detected for KAR from our risk checks.

Karoon Energy Competitors

Melbana Energy

ASX:MAY

AU$227.5m

Calima Energy

ASX:CE1

AU$104.5m

Greenvale Mining

ASX:GRV

AU$73.7m

Cooper Energy

ASX:COE

AU$484.0m

Price History & Performance

Summary of all time highs, changes and price drops for Karoon Energy
Historical stock prices
Current Share Price	AU$1.74
52 Week High	AU$2.42
52 Week Low	AU$1.11
Beta	1.65
1 Month Change	-15.12%
3 Month Change	-20.55%
1 Year Change	30.83%
3 Year Change	87.10%
5 Year Change	33.85%
Change since IPO	923.53%

Recent News & Updates

Apr 19

Is Karoon Energy (ASX:KAR) Using Too Much Debt?

David Iben put it well when he said, 'Volatility is not a risk we care about. What we care about is avoiding the...

Feb 28

We Like These Underlying Return On Capital Trends At Karoon Energy (ASX:KAR)

To find a multi-bagger stock, what are the underlying trends we should look for in a business? In a perfect world, we'd...

Shareholder Returns

	KAR	AU Oil and Gas	AU Market
7D	5.1%	4.7%	2.8%
1Y	30.8%	29.4%	-9.6%

Return vs Industry: KAR exceeded the Australian Oil and Gas industry which returned 29.4% over the past year.

Return vs Market: KAR exceeded the Australian Market which returned -9.6% over the past year.

Price Volatility

Is KAR's price volatile compared to industry and market?
KAR volatility
KAR Average Weekly Movement	7.3%
Oil and Gas Industry Average Movement	12.0%
Market Average Movement	9.8%
10% most volatile stocks in AU Market	16.7%
10% least volatile stocks in AU Market	4.3%

Stable Share Price: KAR is not significantly more volatile than the rest of Australian stocks over the past 3 months, typically moving +/- 7% a week.

Volatility Over Time: KAR's weekly volatility (7%) has been stable over the past year.

About the Company

Founded	Employees	CEO	Website
2003	n/a	Julian Fowles	https://www.karoonenergy.com.au

Karoon Energy Ltd operates as an oil and gas exploration and production company in Australia, Brazil, and Peru. The company holds 100% interest in the Santos Basin consisting of 5 off-shore blocks located in the State of Sáo Paulo, Brazil; 50% interest in the Carnarvon Basin located in the north Western Australia; and the Tumbes Basin covering an area of approximately 4,875 square kilometers located in northern Peru. The company was formerly known as Karoon Gas Australia Ltd and changed its name to Karoon Energy Ltd in December 2018.

Karoon Energy Fundamentals Summary

How do Karoon Energy's earnings and revenue compare to its market cap?
KAR fundamental statistics
Market Cap	US$666.76m
Earnings (TTM)	-US$91.85m
Revenue (TTM)	US$333.48m

2.0x

P/S Ratio

-7.3x

P/E Ratio

Is KAR overvalued?

See Fair Value and valuation analysis

Earnings & Revenue

Key profitability statistics from the latest earnings report
KAR income statement (TTM)
Revenue	US$333.48m
Cost of Revenue	US$199.25m
Gross Profit	US$134.23m
Other Expenses	US$226.07m
Earnings	-US$91.85m

Last Reported Earnings

Dec 31, 2021

Next Earnings Date

n/a

Earnings per share (EPS)	-0.16
Gross Margin	40.25%
Net Profit Margin	-27.54%
Debt/Equity Ratio	10.0%

How did KAR perform over the long term?

See historical performance and comparison

We’ve recently updated our valuation analysis.

Valuation

Is KAR undervalued compared to its fair value, analyst forecasts and its price relative to the market?

Valuation Score

5/6

Valuation Score 5/6

Price-To-Sales vs Peers
Price-To-Sales vs Industry
Price-To-Sales vs Fair Ratio
Below Fair Value
Significantly Below Fair Value
PEG Ratio

Key Valuation Metric

Which metric is best to use when looking at relative valuation for KAR?

Other financial metrics that can be useful for relative valuation.

The above table shows the n/a ratio for KAR. This is calculated by dividing KAR's market cap by their current preferred multiple.
What is KAR's n/a Ratio?
n/a Ratio	0x
n/a	n/a
Market Cap	US$666.76m

KAR key valuation metrics and ratios. From Price to Earnings, Price to Sales and Price to Book to Price to Earnings Growth Ratio, Enterprise Value and EBITDA.
Key Statistics
Enterprise Value/Revenue	2.3x
Enterprise Value/EBITDA	5x
PEG Ratio	n/a

Price to Sales Ratio vs Peers

How does KAR's PS Ratio compare to its peers?

KAR PS Ratio vs Peers

The above table shows the PS ratio for KAR vs its peers. Here we also display the market cap and forecasted growth for additional consideration.
Company	PS	Estimated Growth	Market Cap
Peer Average	233.4x
MAY Melbana Energy	210.8x	n/a	AU$227.5m
CE1 Calima Energy	2.7x	19.2%	AU$104.5m
GRV Greenvale Mining	717.4x	n/a	AU$73.7m
COE Cooper Energy	2.7x	11.6%	AU$484.0m
KAR Karoon Energy	2x	33.0%	AU$969.9m

Forward PS

Price-To-Sales vs Peers: KAR is good value based on its Price-To-Sales Ratio (2x) compared to the peer average (233.4x).

Price to Earnings Ratio vs Industry

How does KAR's PE Ratio compare vs other companies in the AU Oil and Gas Industry?

Price-To-Sales vs Industry: KAR is good value based on its Price-To-Sales Ratio (2x) compared to the Australian Oil and Gas industry average (3.2x)

Price to Sales Ratio vs Fair Ratio

What is KAR's PS Ratio compared to its Fair PS Ratio? This is the expected PS Ratio taking into account the company's forecast earnings growth, profit margins and other risk factors.

KAR PS Ratio vs Fair Ratio.
Fair Ratio
Current PS Ratio	2x
Fair PS Ratio	7.3x

Price-To-Sales vs Fair Ratio: KAR is good value based on its Price-To-Sales Ratio (2x) compared to the estimated Fair Price-To-Sales Ratio (7.3x).

Share Price vs Fair Value

What is the Fair Price of KAR when looking at its future cash flows? For this estimate we use a Discounted Cash Flow model.

Below Fair Value: KAR (A$1.74) is trading below our estimate of fair value (A$32.72)

Significantly Below Fair Value: KAR is trading below fair value by more than 20%.

Price to Earnings Growth Ratio

PEG Ratio: Insufficient data to calculate KAR's PEG Ratio to determine if it is good value.

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Future Growth

How is Karoon Energy forecast to perform in the next 1 to 3 years based on estimates from 5 analysts?

Future Growth Score

6/6

Future Growth Score 6/6

Earnings vs Savings Rate
Earnings vs Market
High Growth Earnings
Revenue vs Market
High Growth Revenue
Future ROE

93.5%

Forecasted annual earnings growth

Earnings and Revenue Growth Forecasts

Analyst Future Growth Forecasts

Earnings vs Savings Rate: KAR is forecast to become profitable over the next 3 years, which is considered faster growth than the savings rate (1.8%).

Earnings vs Market: KAR is forecast to become profitable over the next 3 years, which is considered above average market growth.

High Growth Earnings: KAR is expected to become profitable in the next 3 years.

Revenue vs Market: KAR's revenue (33% per year) is forecast to grow faster than the Australian market (5.1% per year).

High Growth Revenue: KAR's revenue (33% per year) is forecast to grow faster than 20% per year.

Earnings per Share Growth Forecasts

Future Return on Equity

Future ROE: KAR's Return on Equity is forecast to be very high in 3 years time (45.2%).

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Past Performance

How has Karoon Energy performed over the past 5 years?

Past Performance Score

0/6

Past Performance Score 0/6

Quality Earnings
Growing Profit Margin
Earnings Trend
Accelerating Growth
Earnings vs Industry
High ROE

7.9%

Historical annual earnings growth

Earnings and Revenue History

Quality Earnings: KAR is currently unprofitable.

Growing Profit Margin: KAR is currently unprofitable.

Past Earnings Growth Analysis

Earnings Trend: KAR is unprofitable, but has reduced losses over the past 5 years at a rate of 7.9% per year.

Accelerating Growth: Unable to compare KAR's earnings growth over the past year to its 5-year average as it is currently unprofitable

Earnings vs Industry: KAR is unprofitable, making it difficult to compare its past year earnings growth to the Oil and Gas industry (299.7%).

Return on Equity

High ROE: KAR has a negative Return on Equity (-32.76%), as it is currently unprofitable.

Discover strong past performing companies

Financial Health

How is Karoon Energy's financial position?

Financial Health Score

4/6

Financial Health Score 4/6

Short Term Liabilities
Long Term Liabilities
Debt Level
Reducing Debt
Stable Cash Runway
Forecast Cash Runway

Financial Position Analysis

Short Term Liabilities: KAR's short term assets ($257.3M) exceed its short term liabilities ($129.2M).

Long Term Liabilities: KAR's short term assets ($257.3M) do not cover its long term liabilities ($693.3M).

Debt to Equity History and Analysis

Debt Level: KAR has more cash than its total debt.

Reducing Debt: KAR's debt to equity ratio has increased from 0% to 10% over the past 5 years.

Balance Sheet

Cash Runway Analysis

For companies that have on average been loss making in the past we assess whether they have at least 1 year of cash runway.

Stable Cash Runway: Whilst unprofitable KAR has sufficient cash runway for more than 3 years if it maintains its current positive free cash flow level.

Forecast Cash Runway: KAR is unprofitable but has sufficient cash runway for more than 3 years, even with free cash flow being positive and shrinking by 0.4% per year.

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Dividend

What is Karoon Energy current dividend yield, its reliability and sustainability?

Dividend Score

0/6

Dividend Score 0/6

Notable Dividend
High Dividend
Stable Dividend
Growing Dividend
Earnings Coverage
Future Dividend Coverage

Dividend Yield vs Market

Notable Dividend: Unable to evaluate KAR's dividend yield against the bottom 25% of dividend payers, as the company has not reported any recent payouts.

High Dividend: Unable to evaluate KAR's dividend yield against the top 25% of dividend payers, as the company has not reported any recent payouts.

Stability and Growth of Payments

Stable Dividend: Insufficient data to determine if KAR's dividends per share have been stable in the past.

Growing Dividend: Insufficient data to determine if KAR's dividend payments have been increasing.

Earnings Payout to Shareholders

Earnings Coverage: Insufficient data to calculate payout ratio to determine if its dividend payments are covered by earnings.

Cash Payout to Shareholders

Cash Flow Coverage: Unable to calculate sustainability of dividends as KAR has not reported any payouts.

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Management

How experienced are the management team and are they aligned to shareholders interests?

1.3yrs

Average management tenure

CEO

Julian Fowles

1.58yrs

Tenure

US$728,682

Compensation

Dr. Julian David Fowles, PhD BSc(Hons) GDipAFI GAICD has been Managing Director, Chief Executive Officer & Director of Karoon Energy Ltd since November 27, 2020. He served as Independent Non-Executive Dire...

CEO Compensation Analysis

Compensation vs Market: Julian's total compensation ($USD728.68K) is about average for companies of similar size in the Australian market ($USD1.03M).

Compensation vs Earnings: Insufficient data to compare Julian's compensation with company performance.

Leadership Team

Experienced Management: KAR's management team is not considered experienced ( 1.3 years average tenure), which suggests a new team.

Board Members

Experienced Board: KAR's board of directors are considered experienced (3.4 years average tenure).

Ownership

Who are the major shareholders and have insiders been buying or selling?

Insider Trading Volume

Insider Buying: Insufficient data to determine if insiders have bought more shares than they have sold in the past 3 months.

Recent Insider Transactions

Ownership Breakdown

Dilution of Shares: Shareholders have not been meaningfully diluted in the past year.

Data	Last Updated (UTC time)
Company Analysis	2022/06/30 00:00
End of Day Share Price	2022/06/30 00:00
Earnings	2021/12/31
Annual Earnings	2021/06/30