Diamondback Energy (NasdaqGS:FANG) - Share price, News & Analysis

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

FANG ($124.39) is trading below our estimate of [[fair value]] ($203.18)

FANG fundamental analysis
Snowflake Score
Valuation	5/6
Future Growth	0/6
Past Performance	4/6
Financial Health	2/6
Dividends	3/6

FANG Stock Overview

Rewards

Trading at 38.8% below our estimate of its fair value

Became profitable this year

Risk Analysis

Earnings are forecast to decline by an average of 15.9% per year for the next 3 years

Has a high level of debt

Dividend of 9.81% is not well covered by earnings

Significant insider selling over the past 3 months

Diamondback Energy Competitors

Coterra Energy

NYSE:CTRA

US$21.8b

Continental Resources

NYSE:CLR

US$24.0b

Devon Energy

NYSE:DVN

US$38.2b

Pioneer Natural Resources

NYSE:PXD

US$55.7b

Price History & Performance

Summary of all time highs, changes and price drops for Diamondback Energy
Historical stock prices
Current Share Price	US$129.80
52 Week High	US$162.24
52 Week Low	US$65.93
Beta	2.18
1 Month Change	-14.97%
3 Month Change	-6.72%
1 Year Change	40.14%
3 Year Change	24.60%
5 Year Change	43.66%
Change since IPO	641.71%

Recent News & Updates

May 26

Diamondback Energy: Profiting Off High Oil Prices But Still Remarkably Undervalued

Diamondback Energy is one of the largest and most prolific independent operators in the resource-rich Permian Basin. The company boasts substantial reserves that position it quite well for long-term operations. The company has been focusing its attention on maximizing its free cash flow, and this has allowed it to provide considerable rewards for its shareholders. The company boasts a very strong balance sheet without a large amount of debt. The stock appears to be substantially undervalued relative to the company's forward EPS growth.

Shareholder Returns

	FANG	US Oil and Gas	US Market
7D	-1.9%	1.4%	6.3%
1Y	40.1%	34.2%	-18.8%

Return vs Industry: FANG exceeded the US Oil and Gas industry which returned 26.3% over the past year.

Return vs Market: FANG exceeded the US Market which returned -18.4% over the past year.

Price Volatility

Is FANG's price volatile compared to industry and market?
FANG volatility
FANG Average Weekly Movement	7.9%
Oil and Gas Industry Average Movement	8.6%
Market Average Movement	8.1%
10% most volatile stocks in US Market	16.7%
10% least volatile stocks in US Market	3.2%

Stable Share Price: FANG is not significantly more volatile than the rest of US stocks over the past 3 months, typically moving +/- 8% a week.

Volatility Over Time: FANG's weekly volatility (8%) has been stable over the past year.

About the Company

Founded	Employees	CEO	Website
2007	870	Travis Stice	https://www.diamondbackenergy.com

Diamondback Energy, Inc., an independent oil and natural gas company, focuses on the acquisition, development, exploration, and exploitation of unconventional and onshore oil and natural gas reserves in the Permian Basin in West Texas. It focuses on the development of the Spraberry and Wolfcamp formations of the Midland basin; and the Wolfcamp and Bone Spring formations of the Delaware basin, which are part of the Permian Basin in West Texas and New Mexico. As of December 31, 2021, the company’s total acreage position was approximately 524,700 gross acres in the Permian Basin; and estimated proved oil and natural gas reserves were 1,788,991 thousand barrels of crude oil equivalent.

Diamondback Energy Fundamentals Summary

How do Diamondback Energy's earnings and revenue compare to its market cap?
FANG fundamental statistics
Market Cap	US$21.84b
Earnings (TTM)	US$2.74b
Revenue (TTM)	US$7.61b

8.3x

P/E Ratio

3.0x

P/S Ratio

Is FANG overvalued?

See Fair Value and valuation analysis

Earnings & Revenue

Key profitability statistics from the latest earnings report
FANG income statement (TTM)
Revenue	US$7.61b
Cost of Revenue	US$935.00m
Gross Profit	US$6.67b
Other Expenses	US$3.93b
Earnings	US$2.74b

Last Reported Earnings

Mar 31, 2022

Next Earnings Date

n/a

Earnings per share (EPS)	15.61
Gross Margin	87.71%
Net Profit Margin	36.04%
Debt/Equity Ratio	42.2%

How did FANG perform over the long term?

See historical performance and comparison

Dividends

9.4%

Current Dividend Yield

30%

Payout Ratio

We’ve recently updated our valuation analysis.

Valuation

Is FANG 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-Earnings vs Peers
Price-To-Earnings vs Industry
Price-To-Earnings 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 FANG?

Other financial metrics that can be useful for relative valuation.

The above table shows the n/a ratio for FANG. This is calculated by dividing FANG's market cap by their current preferred multiple.
What is FANG's n/a Ratio?
n/a Ratio	0x
n/a	n/a
Market Cap	US$21.84b

FANG 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	3.8x
Enterprise Value/EBITDA	5.5x
PEG Ratio	-0.5x

Price to Earnings Ratio vs Peers

How does FANG's PE Ratio compare to its peers?

FANG PE Ratio vs Peers

The above table shows the PE ratio for FANG vs its peers. Here we also display the market cap and forecasted growth for additional consideration.
Company	PE	Estimated Growth	Market Cap
Peer Average	12.5x
CTRA Coterra Energy	13.3x	-17.2%	US$21.8b
CLR Continental Resources	12x	-14.5%	US$24.0b
DVN Devon Energy	10.8x	-12.1%	US$38.2b
PXD Pioneer Natural Resources	13.3x	-14.6%	US$55.7b
FANG Diamondback Energy	8x	-15.9%	US$21.8b

Forward PE

Price-To-Earnings vs Peers: FANG is good value based on its Price-To-Earnings Ratio (8x) compared to the peer average (12.4x).

Price to Earnings Ratio vs Industry

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

Price-To-Earnings vs Industry: FANG is good value based on its Price-To-Earnings Ratio (8x) compared to the US Oil and Gas industry average (11.6x)

Price to Earnings Ratio vs Fair Ratio

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

FANG PE Ratio vs Fair Ratio.
Fair Ratio
Current PE Ratio	8.3x
Fair PE Ratio	13x

Price-To-Earnings vs Fair Ratio: FANG is good value based on its Price-To-Earnings Ratio (8x) compared to the estimated Fair Price-To-Earnings Ratio (13x).

Share Price vs Fair Value

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

Below Fair Value: FANG ($124.39) is trading below our estimate of fair value ($203.18)

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

Price to Earnings Growth Ratio

PEG Ratio: FANG's earnings are forecast to decline next year, so we can't calculate its PEG ratio.

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Future Growth

How is Diamondback Energy forecast to perform in the next 1 to 3 years based on estimates from 16 analysts?

Future Growth Score

0/6

Future Growth Score 0/6

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

-15.9%

Forecasted annual earnings growth

Earnings and Revenue Growth Forecasts

Analyst Future Growth Forecasts

Earnings vs Savings Rate: FANG's earnings are forecast to decline over the next 3 years (-15.9% per year).

Earnings vs Market: FANG's earnings are forecast to decline over the next 3 years (-15.9% per year).

High Growth Earnings: FANG's earnings are forecast to decline over the next 3 years.

Revenue vs Market: FANG's revenue is expected to decline over the next 3 years (-10.9% per year).

High Growth Revenue: FANG's revenue is forecast to decline over the next 3 years (-10.9% per year).

Earnings per Share Growth Forecasts

Future Return on Equity

Future ROE: FANG's Return on Equity is forecast to be low in 3 years time (15.8%).

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Past Performance

How has Diamondback Energy performed over the past 5 years?

Past Performance Score

4/6

Past Performance Score 4/6

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

-20.2%

Historical annual earnings growth

Earnings and Revenue History

Quality Earnings: FANG has high quality earnings.

Growing Profit Margin: FANG became profitable in the past.

Past Earnings Growth Analysis

Earnings Trend: FANG has become profitable over the past 5 years, growing earnings by -20.2% per year.

Accelerating Growth: FANG has become profitable in the last year, making the earnings growth rate difficult to compare to its 5-year average.

Earnings vs Industry: FANG has become profitable in the last year, making it difficult to compare its past year earnings growth to the Oil and Gas industry (98.5%).

Return on Equity

High ROE: FANG's Return on Equity (20.6%) is considered high.

Discover strong past performing companies

Financial Health

How is Diamondback 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: FANG's short term assets ($1.3B) do not cover its short term liabilities ($1.9B).

Long Term Liabilities: FANG's short term assets ($1.3B) do not cover its long term liabilities ($7.6B).

Debt to Equity History and Analysis

Debt Level: FANG's net debt to equity ratio (41.1%) is considered high.

Reducing Debt: FANG's debt to equity ratio has increased from 19.3% to 42.2% over the past 5 years.

Debt Coverage: FANG's debt is well covered by operating cash flow (78.2%).

Interest Coverage: FANG's interest payments on its debt are well covered by EBIT (21.1x coverage).

Balance Sheet

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Dividend

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

Dividend Score

4/6

Dividend Score 4/6

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

9.40%

Current Dividend Yield

Dividend Yield vs Market

Notable Dividend: FANG's dividend (9.81%) is higher than the bottom 25% of dividend payers in the US market (1.57%).

High Dividend: FANG's dividend (9.81%) is in the top 25% of dividend payers in the US market (4.23%)

Stability and Growth of Payments

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

Growing Dividend: FANG's dividend payments have increased, but the company has only paid a dividend for 4 years.

Earnings Payout to Shareholders

Earnings Coverage: With its reasonably low payout ratio (30.2%), FANG's dividend payments are well covered by earnings.

Cash Payout to Shareholders

Cash Flow Coverage: With its high cash payout ratio (98.2%), FANG's dividend payments are not well covered by cash flows.

Discover strong dividend paying companies

Management

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

3.3yrs

Average management tenure

CEO

Travis Stice (59 yo)

10.42yrs

Tenure

US$13,839,995

Compensation

Mr. Travis D. Stice is Chief Executive Officer and Director at QEP Resources, Inc. since March 17, 2021. He has been the Chief Executive Officer and Director of Energen Corporation since November 29, 2018....

CEO Compensation Analysis

Compensation vs Market: Travis's total compensation ($USD13.84M) is about average for companies of similar size in the US market ($USD13.43M).

Compensation vs Earnings: Travis's compensation has been consistent with company performance over the past year.

Leadership Team

Experienced Management: FANG's management team is considered experienced (3.3 years average tenure).

Board Members

Experienced Board: FANG's board of directors are considered experienced (9.6 years average tenure).

Ownership

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

Insider Trading Volume

Insider Buying: FANG insiders have only sold shares 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	2022/06/28 00:00
End of Day Share Price	2022/06/28 00:00
Earnings	2022/03/31
Annual Earnings	2021/12/31