Diversified Energy (LSE:DEC) - Share price, News & Analysis

DEC fundamental analysis
Snowflake Score
Valuation	5/6
Future Growth	4/6
Past Performance	0/6
Financial Health	2/6
Dividends	2/6

DEC Stock Overview

Diversified Energy Company PLC operates as an independent owner and operator of producing natural gas and oil wells primarily in the Appalachian Basin of the United States.

Rewards

Trading at 69.6% below our estimate of its fair value

Earnings are forecast to grow 81.18% per year

Risk Analysis

Dividend of 12.35% is not well covered by earnings or forecast to be in the next 3 years

Has a high level of debt

Diversified Energy Competitors

Price History & Performance

Summary of all time highs, changes and price drops for Diversified Energy
Historical stock prices
Current Share Price	UK£1.12
52 Week High	UK£1.29
52 Week Low	UK£0.94
Beta	-0.12
1 Month Change	-8.94%
3 Month Change	-3.95%
1 Year Change	8.32%
3 Year Change	0.90%
5 Year Change	60.86%
Change since IPO	99.11%

Shareholder Returns

	DEC	GB Oil and Gas	GB Market
7D	0%	1.8%	2.3%
1Y	8.3%	0.9%	-8.6%

Return vs Industry: DEC exceeded the UK Oil and Gas industry which returned 0.9% over the past year.

Return vs Market: DEC exceeded the UK Market which returned -8.6% over the past year.

Price Volatility

Is DEC's price volatile compared to industry and market?
DEC volatility
DEC Average Weekly Movement	4.1%
Oil and Gas Industry Average Movement	8.8%
Market Average Movement	5.5%
10% most volatile stocks in GB Market	10.8%
10% least volatile stocks in GB Market	2.8%

Stable Share Price: DEC is not significantly more volatile than the rest of UK stocks over the past 3 months, typically moving +/- 4% a week.

Volatility Over Time: DEC's weekly volatility (4%) has been stable over the past year.

About the Company

Founded	Employees	CEO	Website
2001	1,426	Rusty Hutson	https://www.div.energy

Diversified Energy Company PLC operates as an independent owner and operator of producing natural gas and oil wells primarily in the Appalachian Basin of the United States. The company is involved in the production, marketing, and transportation of natural gas, natural gas liquids, crude oil, and condensates. Its assets consist of approximately 67,000 conventional and unconventional natural gas, natural gas liquids, and oil producing wells; and approximately 17,000 miles of natural gas gathering pipelines located in the states of Tennessee, Kentucky, Virginia, West Virginia, Ohio, and Pennsylvania.

Diversified Energy Fundamentals Summary

How do Diversified Energy's earnings and revenue compare to its market cap?
DEC fundamental statistics
Market Cap	US$1.17b
Earnings (TTM)	-US$325.51m
Revenue (TTM)	US$1.01b

1.2x

P/S Ratio

-3.6x

P/E Ratio

Is DEC overvalued?

See Fair Value and valuation analysis

Earnings & Revenue

Key profitability statistics from the latest earnings report
DEC income statement (TTM)
Revenue	US$1.01b
Cost of Revenue	US$291.21m
Gross Profit	US$716.35m
Other Expenses	US$1.04b
Earnings	-US$325.51m

Last Reported Earnings

Dec 31, 2021

Next Earnings Date

n/a

Earnings per share (EPS)	-0.38
Gross Margin	71.10%
Net Profit Margin	-32.31%
Debt/Equity Ratio	152.2%

How did DEC perform over the long term?

See historical performance and comparison

Dividends

12.3%

Current Dividend Yield

-40%

Payout Ratio

Does DEC pay a reliable dividends?

See DEC dividend history and benchmarks

When do you need to buy DEC by to receive an upcoming dividend?
Diversified Energy dividend dates
Ex Dividend Date	Sep 01 2022
Dividend Pay Date	Sep 26 2022
Days until Ex dividend	66 days
Days until Dividend pay date	91 days

Does DEC pay a reliable dividends?

See DEC dividend history and benchmarks

We’ve recently updated our valuation analysis.

Valuation

Is DEC 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 DEC?

Other financial metrics that can be useful for relative valuation.

The above table shows the n/a ratio for DEC. This is calculated by dividing DEC's market cap by their current preferred multiple.
What is DEC's n/a Ratio?
n/a Ratio	0x
n/a	n/a
Market Cap	US$1.17b

DEC 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	2.1x
Enterprise Value/EBITDA	-6.4x
PEG Ratio	n/a

Price to Sales Ratio vs Peers

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

DEC PS Ratio vs Peers

The above table shows the PS ratio for DEC vs its peers. Here we also display the market cap and forecasted growth for additional consideration.
Company	PS	Estimated Growth	Market Cap
Peer Average	1.5x

Forward PS

Price-To-Sales vs Peers: DEC is good value based on its Price-To-Sales Ratio (1.2x) compared to the peer average (1.5x).

Price to Earnings Ratio vs Industry

How does DEC's PE Ratio compare vs other companies in the U.K. Oil and Gas Industry?

Price-To-Sales vs Industry: DEC is good value based on its Price-To-Sales Ratio (1.2x) compared to the UK Oil and Gas industry average (1.8x)

Price to Sales Ratio vs Fair Ratio

What is DEC'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.

DEC PS Ratio vs Fair Ratio.
Fair Ratio
Current PS Ratio	1.2x
Fair PS Ratio	3.5x

Price-To-Sales vs Fair Ratio: DEC is good value based on its Price-To-Sales Ratio (1.2x) compared to the estimated Fair Price-To-Sales Ratio (3.5x).

Share Price vs Fair Value

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

Below Fair Value: DEC (£1.12) is trading below our estimate of fair value (£3.69)

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

Price to Earnings Growth Ratio

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

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Future Growth

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

Future Growth Score

4/6

Future Growth Score 4/6

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

81.2%

Forecasted annual earnings growth

Earnings and Revenue Growth Forecasts

Analyst Future Growth Forecasts

Earnings vs Savings Rate: DEC is forecast to become profitable over the next 3 years, which is considered faster growth than the savings rate (0.9%).

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

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

Revenue vs Market: DEC's revenue (9.1% per year) is forecast to grow faster than the UK market (4.1% per year).

High Growth Revenue: DEC's revenue (9.1% per year) is forecast to grow slower than 20% per year.

Earnings per Share Growth Forecasts

Future Return on Equity

Future ROE: DEC's Return on Equity is forecast to be low in 3 years time (18.7%).

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Past Performance

How has Diversified 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

-40.8%

Historical annual earnings growth

Earnings and Revenue History

Quality Earnings: DEC is currently unprofitable.

Growing Profit Margin: DEC is currently unprofitable.

Past Earnings Growth Analysis

Earnings Trend: DEC is unprofitable, and losses have increased over the past 5 years at a rate of 40.8% per year.

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

Earnings vs Industry: DEC is unprofitable, making it difficult to compare its past year earnings growth to the Oil and Gas industry (344.7%).

Return on Equity

High ROE: DEC has a negative Return on Equity (-48.98%), as it is currently unprofitable.

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Financial Health

How is Diversified Energy's financial position?

Financial Health Score

2/6

Financial Health Score 2/6

Short Term Liabilities
Long Term Liabilities
Debt Level
Reducing Debt
Debt Coverage
Interest Coverage

Financial Position Analysis

Short Term Liabilities: DEC's short term assets ($337.1M) do not cover its short term liabilities ($773.6M).

Long Term Liabilities: DEC's short term assets ($337.1M) do not cover its long term liabilities ($2.1B).

Debt to Equity History and Analysis

Debt Level: DEC's net debt to equity ratio (150.3%) is considered high.

Reducing Debt: DEC's debt to equity ratio has reduced from 409.5% to 152.2% over the past 5 years.

Debt Coverage: DEC's debt is well covered by operating cash flow (31.7%).

Interest Coverage: Insufficient data to determine if DEC's interest payments on its debt are well covered by EBIT.

Balance Sheet

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Dividend

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

Dividend Score

2/6

Dividend Score 2/6

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

12.35%

Current Dividend Yield

Upcoming Dividend Payment

Dividend Yield vs Market

Notable Dividend: DEC's dividend (12.35%) is higher than the bottom 25% of dividend payers in the UK market (1.88%).

High Dividend: DEC's dividend (12.35%) is in the top 25% of dividend payers in the UK market (5.18%)

Stability and Growth of Payments

Stable Dividend: Whilst dividend payments have been stable, DEC has been paying a dividend for less than 10 years.

Growing Dividend: DEC's dividend payments have increased, but the company has only paid a dividend for 5 years.

Earnings Payout to Shareholders

Earnings Coverage: DEC is paying a dividend but the company is unprofitable.

Cash Payout to Shareholders

Cash Flow Coverage: DEC is paying a dividend but the company has no free cash flows.

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Management

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

4.2yrs

Average management tenure

CEO

Rusty Hutson (52 yo)

no data

Tenure

US$2,073,000

Compensation

Mr. Robert Russell Hutson, Jr., also known as Rusty, is Co-Founder of Diversified Energy Company PLC (formerly known as Diversified Gas & Oil PLC). Mr. Hutson was Chief Executive Officer at Atlas Resources...

CEO Compensation Analysis

Compensation vs Market: Rusty's total compensation ($USD2.07M) is above average for companies of similar size in the UK market ($USD1.36M).

Compensation vs Earnings: Rusty's compensation has increased whilst the company is unprofitable.

Leadership Team

Experienced Management: DEC's management team is considered experienced (4.2 years average tenure).

Board Members

Experienced Board: DEC's board of directors are considered experienced (4.2 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	2022/06/26 00:00
End of Day Share Price	2022/06/24 00:00
Earnings	2021/12/31
Annual Earnings	2021/12/31