Is There an Opportunity in Black Stone Minerals After the 13% Price Drop in 2025?

Thinking about what to do with Black Stone Minerals stock? Whether you’re sitting on some units already or just considering a buy, you’re definitely not alone. After a tough start to the year, with the price dropping 13.3% so far, a lot of investors are re-examining their stance. But here’s the twist: while the 7-day return is down 4.9%, the past month brought a small turnaround with a 3.0% gain. That kind of short-term volatility can make it tricky to judge the real story, especially when you see the stock hanging onto a hefty 234.2% gain over the last five years, suggesting strong long-term momentum despite recent bumps.

Some of these moves line up with shifting market sentiment around energy prices and mineral rights investments. When the broader commodities market flickers with uncertainty, names like Black Stone Minerals often get swept along for the ride, sometimes more than they deserve. Investors looking for stability might have concerns, but those focusing on the bigger picture could see opportunity lurking beneath the surface.

On the valuation front, things get interesting. Out of six standard checks for undervaluation, Black Stone Minerals scores a solid 5, hinting at potential bargains that could be overlooked in today’s market. In the next section, we’ll break down how those scores are calculated and dig into the different valuation methods. And just when you think you’ve heard it all, there’s one more approach that may give you the clearest answer of all. It’s coming up at the end of the article.

Why Black Stone Minerals is lagging behind its peers

Approach 1: Black Stone Minerals Discounted Cash Flow (DCF) Analysis

The Discounted Cash Flow (DCF) model estimates a company’s true worth by projecting future cash flows and then discounting them back to their value today. In simple terms, it asks: if you could pocket all Black Stone Minerals’ future cash today, how much would that be worth?

Black Stone Minerals currently reports Free Cash Flow of $281.06 million. Looking ahead, analysts forecast a declining trend, with Free Cash Flow projected at $237.16 million in 2026 and $204.11 million by 2035. These longer-term numbers are extrapolated by Simply Wall St, since most analysts provide estimates only up to five years. Over this period, the company’s annual cash flows are expected to shrink slightly, reflecting shifts in operating conditions and broader industry trends.

Using these projections in the DCF model results in an estimated intrinsic value of $20.76 per share. With the current share price trading at a 38.9% discount to this value, the analysis suggests the stock is substantially undervalued at this time.

Result: UNDERVALUED

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Black Stone Minerals.

Our Discounted Cash Flow (DCF) analysis suggests Black Stone Minerals is undervalued by 38.9%. Track this in your watchlist or portfolio, or discover more undervalued stocks.

Approach 2: Black Stone Minerals Price vs Earnings (PE Ratio)

The Price-to-Earnings (PE) ratio is a time-tested tool for valuing profitable companies like Black Stone Minerals. Because earnings ultimately support a company’s value, the PE ratio tells investors how much they’re paying for every dollar the business earns. Generally, higher growth prospects or lower perceived risk allow for a higher "normal" PE ratio. In contrast, slow growth or elevated risk usually keep these multiples lower.

At present, Black Stone Minerals trades at a PE ratio of 10.95x. That is noticeably lower than both the Oil and Gas industry average of 13.17x and the average among its listed peers, which sits at 29.32x. While comparisons like these can be informative, they do not always consider company-specific nuances that actually drive fair value.

This is where the proprietary "Fair Ratio" from Simply Wall St comes in. This metric estimates a justifiable PE ratio for Black Stone Minerals based on its projected earnings growth, profit margins, market cap, and the broader risk profile. For Black Stone Minerals, the Fair Ratio currently sits at 15.57x. Because this is tailored to the company’s individual financial profile, it offers a more accurate reflection of fair value than broad peer or sector averages.

Comparing the actual PE of 10.95x to the Fair Ratio of 15.57x, the numbers point to the stock being significantly undervalued using this method.

Result: UNDERVALUED

PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your Black Stone Minerals Narrative

Earlier, we mentioned that there is an even better way to understand valuation, so let’s introduce you to Narratives. A Narrative puts your perspective—your story about a company—at the center, connecting what you believe about Black Stone Minerals’ business, industry drivers, and financial outlook to a quantitative forecast and fair value estimate. Instead of just relying on analyst estimates or standard ratios, Narratives allow you to make your own assumptions about future revenue, profit margins, and valuation multiples, then automatically see what the company is truly worth based on those inputs.

On Simply Wall St’s Community page, Narratives are a user-friendly tool that helps millions of investors frame the “why” behind their investment thesis, linking a company’s story with a custom financial forecast and real-time fair value. Narratives let you instantly compare your Fair Value to today’s stock price, making your buy, sell, or hold decision clearer, while staying current as new information (like earnings updates or news) is added dynamically.

For example, some investors believe Black Stone Minerals’ upcoming drilling expansion and operator diversification will fuel strong revenue growth and margin resilience, supporting a higher fair value and signaling potential upside. Others, more concerned about production headwinds or changing energy trends, see a lower fair value and might view the stock as fairly priced or even overvalued. With Narratives, you can explore both perspectives or chart your own, backed by your assumptions and the latest data.

Do you think there's more to the story for Black Stone Minerals? Create your own Narrative to let the Community know!

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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