Stock Analysis
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- NYSE:CRK
The total return for Comstock Resources (NYSE:CRK) investors has risen faster than earnings growth over the last three years
Comstock Resources, Inc. (NYSE:CRK) shareholders might understandably be very concerned that the share price has dropped 31% in the last quarter. But in three years the returns have been great. Indeed, the share price is up a very strong 106% in that time. So the recent fall in the share price should be viewed in that context. Only time will tell if there is still too much optimism currently reflected in the share price.
While the stock has fallen 12% this week, it's worth focusing on the longer term and seeing if the stocks historical returns have been driven by the underlying fundamentals.
Check out our latest analysis for Comstock Resources
While markets are a powerful pricing mechanism, share prices reflect investor sentiment, not just underlying business performance. One way to examine how market sentiment has changed over time is to look at the interaction between a company's share price and its earnings per share (EPS).
Comstock Resources became profitable within the last three years. That kind of transition can be an inflection point that justifies a strong share price gain, just as we have seen here.
The company's earnings per share (over time) is depicted in the image below (click to see the exact numbers).
It's good to see that there was some significant insider buying in the last three months. That's a positive. On the other hand, we think the revenue and earnings trends are much more meaningful measures of the business. Dive deeper into the earnings by checking this interactive graph of Comstock Resources' earnings, revenue and cash flow.
What About Dividends?
When looking at investment returns, it is important to consider the difference between total shareholder return (TSR) and share price return. The TSR is a return calculation that accounts for the value of cash dividends (assuming that any dividend received was reinvested) and the calculated value of any discounted capital raisings and spin-offs. So for companies that pay a generous dividend, the TSR is often a lot higher than the share price return. We note that for Comstock Resources the TSR over the last 3 years was 110%, which is better than the share price return mentioned above. And there's no prize for guessing that the dividend payments largely explain the divergence!
A Different Perspective
Pleasingly, Comstock Resources' total shareholder return last year was 9.1%. That's including the dividend. The TSR has been even better over three years, coming in at 28% per year. I find it very interesting to look at share price over the long term as a proxy for business performance. But to truly gain insight, we need to consider other information, too. Even so, be aware that Comstock Resources is showing 4 warning signs in our investment analysis , and 1 of those is a bit concerning...
If you like to buy stocks alongside management, then you might just love this free list of companies. (Hint: insiders have been buying them).
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on American exchanges.
What are the risks and opportunities for Comstock Resources?
Comstock Resources, Inc., an independent energy company, engages in the acquisition, exploration, development, and production of oil and natural gas primarily in North Louisiana and East Texas, the United States.
Rewards
Trading at 34.2% below our estimate of its fair value
Became profitable this year
Risks
Earnings are forecast to decline by an average of 2.8% per year for the next 3 years
Shareholders have been diluted in the past year
Has a high level of debt
Further research on
Comstock Resources
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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.
About NYSE:CRK
Comstock Resources
Comstock Resources, Inc., an independent energy company, engages in the acquisition, exploration, development, and production of oil and natural gas primarily in North Louisiana and East Texas, the United States.
Undervalued with proven track record and pays a dividend.
