California Resources (CRC): Reassessing Valuation After EPS Beat and New Analyst Coverage on Carbon Capture Growth Potential

California Resources (CRC) has landed on investors’ radar after Wells Fargo initiated coverage, alongside a third quarter earnings beat on earnings per share, even as revenue came in lighter than forecasts.

See our latest analysis for California Resources.

The muted 1 month share price return of 2.3% and slightly negative year to date share price return sit awkwardly against a robust 3 year total shareholder return of about 28%, suggesting momentum is only cautiously rebuilding as investors reassess CRC’s energy transition and carbon capture story following the earnings surprise and new coverage.

If CRC’s mix of traditional energy and carbon projects has caught your eye, this could be a good moment to explore aerospace and defense stocks that may also benefit from shifting policy and infrastructure spending.

With earnings surprising to the upside and analysts seeing hefty potential upside to fair value, is California Resources still trading at a meaningful discount, or has the market already baked in its energy transition growth story?

Most Popular Narrative Narrative: 27.3% Undervalued

With the narrative fair value of $65.64 sitting well above the last close at $47.74, the focus shifts to how such a premium is justified.

The company's advanced progress and upcoming operational launch of California's first CCS project, alongside legislative support for CO2 pipelines and clean power procurement, positions CRC to capture meaningful new, high-margin revenue streams from carbon management services, boosting long-term earnings and margins.

Read the complete narrative.

Curious why a business with shrinking margins and falling earnings still commands a much richer future earnings multiple in this narrative? The answer lies in a bold mix of revenue reshaping, aggressive share count reduction, and a valuation multiple more often reserved for high growth sectors. Want to see how these moving parts stack up into that higher fair value? Dive in to uncover the full logic behind the projections.

Result: Fair Value of $65.64 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, persistent permitting uncertainty and potential delays to CRC’s early stage CCS projects could quickly challenge the lofty multiple on which this narrative relies.

Find out about the key risks to this California Resources narrative.

Build Your Own California Resources Narrative

If this perspective does not sit right with you, or you would rather stress test the assumptions yourself, you can assemble a custom view in just a few minutes: Do it your way

A great starting point for your California Resources research is our analysis highlighting 3 key rewards and 2 important warning signs that could impact your investment decision.

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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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