Is Civitas Resources a 2025 Bargain After a 36% Slide and Strong Cash Flow Outlook?

• Wondering whether Civitas Resources is a value play or a value trap at today’s price? You are not alone. This stock has quietly shifted from market favorite to contrarian idea.
• The share price has bounced about 10.5% over the last month but is still down roughly 36.4% year to date and 33.8% over the last year, a mix that often signals either a looming problem or a mispriced opportunity.
• Recent headlines around Civitas have focused on its portfolio positioning and capital discipline in a choppy energy market, with investors weighing how its acreage quality and balance sheet stack up against other shale operators. At the same time, sector wide swings in commodity expectations and shifts in risk appetite have magnified every move in the stock, making sentiment as important as the fundamentals driving it.
• On our framework, Civitas scores a solid 5/6 valuation check, which firmly tilts the story toward undervaluation. Next we will break down how different valuation approaches view that gap, before finishing with a more nuanced way to decide what the stock is really worth to you.

Find out why Civitas Resources's -33.8% return over the last year is lagging behind its peers.

Approach 1: Civitas Resources Discounted Cash Flow (DCF) Analysis

A Discounted Cash Flow model estimates what a business is worth today by projecting the cash it can generate in the future and discounting those dollars back to the present. For Civitas Resources, the model used is a 2 Stage Free Cash Flow to Equity approach, based on cash flows in $.

Civitas currently generates about $910.7 million in free cash flow, and analyst projections, extended by Simply Wall St beyond year five, see this climbing to roughly $2.42 billion by 2035. Over the next decade, annual free cash flow is modeled to rise steadily, with key projection years such as 2029 estimated at $1.43 billion, before growth moderates in the later years.

When all these projected cash flows are discounted back to today, the DCF model produces an estimated intrinsic value of about $325.06 per share. Compared with the current market price, this implies the stock is roughly 90.7% undervalued, suggesting the market is heavily discounting Civitas relative to its modeled cash generation.

Result: UNDERVALUED

Our Discounted Cash Flow (DCF) analysis suggests Civitas Resources is undervalued by 90.7%. Track this in your watchlist or portfolio, or discover 909 more undervalued stocks based on cash flows.

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

Approach 2: Civitas Resources Price vs Earnings

For a profitable producer like Civitas Resources, the price to earnings (PE) ratio is a useful way to see what investors are paying for each dollar of current earnings. In general, companies with stronger growth prospects and lower perceived risk can justify a higher PE, while slower growth and higher uncertainty usually mean the market will only pay a lower multiple.

Civitas currently trades on a PE of about 4.06x, which is far below the Oil and Gas industry average of around 13.59x and well under the broader peer group average of roughly 35.29x. Simply Wall St also calculates a Fair Ratio of about 13.59x for Civitas, a proprietary estimate of what its PE should be given its earnings growth profile, margins, industry, market cap and risk factors.

This Fair Ratio improves on simple peer and industry comparisons because it adjusts for the specific strengths and risks of Civitas rather than assuming it should trade like a typical sector name. With the shares at 4.06x versus a Fair Ratio near 13.59x, the multiple based view aligns with the DCF work and indicates that the stock appears materially undervalued.

Result: UNDERVALUED

PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover 1446 companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your Civitas Resources Narrative

Earlier we mentioned that there is an even better way to understand valuation. Let us introduce you to Narratives, an easy tool on Simply Wall St’s Community page that helps you connect your view of Civitas Resources’ story to your own revenue, earnings and margin forecasts. You can turn those forecasts into a fair value, and then compare that fair value with the current share price to decide whether to buy, hold, or sell. The Narrative automatically updates as new news or earnings arrive. For example, a bullish investor who believes earnings can grow toward the higher analyst band of about $1.1 billion and supports a fair value well above the current mid $30s might see significant upside. In contrast, a more cautious investor anchoring on the lower $407.1 million earnings view and a tighter multiple could set a much lower fair value closer to the low $30s. Both investors can clearly see how their story flows through the numbers to a price and can adjust their decisions as conditions change.

Do you think there's more to the story for Civitas Resources? Head over to our Community to see what others are saying!

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com