NYSE:CXO

Stock Analysis Report

Executive Summary

Concho Resources Inc., an independent oil and natural gas company, engages in the acquisition, development, and exploration of oil and natural gas properties in the United States.

Rewards

Trading at 10.5% below its fair value

Earnings are forecast to grow 34.2% per year

Earnings grew by 22.8% over the past year

Risk Analysis

Large one-off items impacting financial results

Shareholders have been diluted in the past year



Snowflake Analysis

Excellent balance sheet and good value.


Similar Companies

Pioneer Natural Resources

NYSE:PXD

Share Price & News

How has Concho Resources's share price performed over time and what events caused price changes?


Latest Share Price and Events

Stable Share Price: CXO has not had significant price volatility in the past 3 months.


Market Performance


7 Day Return

-8.4%

CXO

-4.6%

US Oil and Gas

-1.3%

US Market


1 Year Return

-30.4%

CXO

-10.3%

US Oil and Gas

22.0%

US Market

Return vs Industry: CXO underperformed the US Oil and Gas industry which returned -4.2% over the past year.

Return vs Market: CXO underperformed the US Market which returned 24.7% over the past year.


Shareholder returns

CXOIndustryMarket
7 Day-8.4%-4.6%-1.3%
30 Day-3.3%-6.1%1.6%
90 Day27.0%-2.8%8.9%
1 Year-30.0%-30.4%-7.0%-10.3%24.7%22.0%
3 Year-42.4%-42.7%-12.0%-20.1%49.4%39.7%
5 Year-25.1%-25.5%-13.8%-26.2%78.1%58.5%

Price Volatility Vs. Market

How volatile is Concho Resources's share price compared to the market and industry in the last 5 years?


Simply Wall St News

Valuation

Is Concho Resources undervalued compared to its fair value and its price relative to the market?

10.9%

Undervalued compared to fair value


Share Price vs. Fair Value

Below Fair Value: CXO ($89.65) is trading below our estimate of fair value ($100.12)

Significantly Below Fair Value: CXO is trading below fair value, but not by a significant amount.


Price To Earnings Ratio

PE vs Industry: CXO is poor value based on its PE Ratio (14.1x) compared to the Oil and Gas industry average (10.2x).

PE vs Market: CXO is good value based on its PE Ratio (14.1x) compared to the US market (18.9x).


Price to Earnings Growth Ratio

PEG Ratio: CXO is good value based on its PEG Ratio (0.4x)


Price to Book Ratio

PB vs Industry: CXO is good value based on its PB Ratio (0.9x) compared to the US Oil and Gas industry average (1x).


Next Steps

Future Growth

How is Concho Resources forecast to perform in the next 1 to 3 years based on estimates from 22 analysts?

35.2%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: CXO's forecast earnings growth (34.2% per year) is above the savings rate (1.7%).

Earnings vs Market: CXO's earnings (34.2% per year) are forecast to grow faster than the US market (14.3% per year).

High Growth Earnings: earnings are expected to grow significantly over the next 3 years.

Revenue vs Market: CXO's revenue (9.5% per year) is forecast to grow faster than the US market (7.5% per year).

High Growth Revenue: CXO's revenue (9.5% per year) is forecast to grow slower than 20% per year.


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: CXO's Return on Equity is forecast to be low in 3 years time (8.9%).


Next Steps

Past Performance

How has Concho Resources performed over the past 5 years?

34.1%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: CXO has a large one-off gain of $566.0M impacting its September 30 2019 financial results.

Growing Profit Margin: CXO's current net profit margins (30.6%) are higher than last year (28.6%).


Past Earnings Growth Analysis

Earnings Trend: CXO's earnings have grown significantly by 34.1% per year over the past 5 years.

Accelerating Growth: CXO's earnings growth over the past year (22.8%) is below its 5-year average (34.1% per year).

Earnings vs Industry: CXO earnings growth over the past year (22.8%) exceeded the Oil and Gas industry -13.3%.


Return on Equity

High ROE: CXO's Return on Equity (6.9%) is considered low.


Return on Assets


Return on Capital Employed


Next Steps

Financial Health

How is Concho Resources's financial position?


Financial Position Analysis

Short Term Liabilities: CXO's short term assets ($2.0B) exceed its short term liabilities ($1.3B).

Long Term Liabilities: CXO's short term assets ($2.0B) do not cover its long term liabilities ($6.3B).


Debt to Equity History and Analysis

Debt Level: CXO's debt to equity ratio (23.8%) is considered satisfactory.

Reducing Debt: CXO's debt to equity ratio has reduced from 65.7% to 23.8% over the past 5 years.

Debt Coverage: CXO's debt is well covered by operating cash flow (62.8%).

Interest Coverage: CXO's interest payments on its debt are well covered by EBIT (6.6x coverage).


Balance Sheet

Inventory Level: CXO has a high level of physical assets or inventory.

Debt Coverage by Assets: CXO's debt is not covered by short term assets (assets are 0.5x debt).


Next Steps

Dividend

What is Concho Resources's current dividend yield, its reliability and sustainability?

0.60%

Current Dividend Yield


Dividend Yield vs Market

company0.6%marketbottom25%1.4%markettop25%3.7%industryaverage4.3%forecastin3Years0.6%

Current dividend yield vs market & industry

Notable Dividend: CXO's dividend (0.56%) isn’t notable compared to the bottom 25% of dividend payers in the US market (1.4%).

High Dividend: CXO's dividend (0.56%) is low compared to the top 25% of dividend payers in the US market (3.66%).


Stability and Growth of Payments

Stable Dividend: CXO is not paying a notable dividend for the US market, therefore no need to check if payments are stable.

Growing Dividend: CXO is not paying a notable dividend for the US market, therefore no need to check if payments are increasing.


Current Payout to Shareholders

Dividend Coverage: CXO is not paying a notable dividend for the US market.


Future Payout to Shareholders

Future Dividend Coverage: No need to calculate the sustainability of CXO's dividend in 3 years as they are not forecast to pay a notable one for the US market.


Next Steps

Management

What is the CEO of Concho Resources's salary, the management and board of directors tenure and is there insider trading?

2.7yrs

Average management tenure


CEO

Tim Leach (59yo)

13.9yrs

Tenure

US$13,317,156

Compensation

Mr. Timothy A. Leach, also known as Tim, serves as Chairman and Chief Executive Officer at Concho Resources Inc. since February 2006 and served as its President from July 1, 2009 to May 18, 2017. Mr. Leach ...


CEO Compensation Analysis

Compensation vs Market: Tim's total compensation ($USD13.32M) is about average for companies of similar size in the US market ($USD10.76M).

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


Management Age and Tenure

2.7yrs

Average Tenure

45yo

Average Age

Experienced Management: CXO's management team is considered experienced (2.7 years average tenure).


Board Age and Tenure

8.0yrs

Average Tenure

62.5yo

Average Age

Experienced Board: CXO's board of directors are considered experienced (8 years average tenure).


Insider Trading

Insider Buying: Insufficient data to determine if insiders have bought more shares than they have sold in the past 3 months.


Recent Insider Transactions

BuyUS$104,50019 Aug 19
Brenda Schroer
EntityIndividual
Role
Chief Financial Officer
Senior VP
Shares1,500
Max PriceUS$70.05
BuyUS$136,96014 Aug 19
Mark Puckett
EntityIndividual
Role
Lead Director
Lead Independent Director
Shares2,000
Max PriceUS$68.48
BuyUS$49,08408 Aug 19
Susan Helms
EntityIndividual
Role
Member of the Board of Directors
Independent Director
Shares700
Max PriceUS$70.12
BuyUS$654,00007 Aug 19
Jack Harper
EntityIndividual
Role
President
President
Shares10,000
Max PriceUS$65.40
BuyUS$139,80006 Aug 19
Gary Merriman
EntityIndividual
Role
Member of the Board of Directors
Independent Director
Shares2,000
Max PriceUS$69.90
BuyUS$492,24006 Aug 19
Tucker Bridwell
EntityIndividual
Role
Member of the Board of Directors
Independent Director
Shares7,000
Max PriceUS$70.32
SellUS$5,964,10203 May 19
Timothy Leach
EntityIndividual
Role
Chief Executive Officer
Chairman of the Board & CEO
Shares54,545
Max PriceUS$109.36
SellUS$749,25013 Mar 19
Steven Beal
EntityIndividual
Role
Member of the Board of Directors
Independent Director
Shares7,500
Max PriceUS$99.90
BuyUS$223,02001 Mar 19
Gary Merriman
EntityIndividual
Role
Member of the Board of Directors
Independent Director
Shares2,000
Max PriceUS$111.51
SellUS$462,08401 Mar 19
Scott Kidwell
EntityIndividual
Role
Chief Administrative Officer
Senior Vice President of Administration
Shares4,200
Max PriceUS$110.02

Ownership Breakdown

Dilution of Shares: Shareholders have been diluted in the past year, with total shares outstanding growing by 26%.


Management Team

  • Jack Harper (47yo)

    President

    • Tenure: 2.7yrs
    • Compensation: US$6.42m
  • Tim Leach (59yo)

    Chairman of the Board & CEO

    • Tenure: 13.9yrs
    • Compensation: US$13.32m
  • Will Giraud (39yo)

    Executive VP & COO

    • Tenure: 1yrs
    • Compensation: US$5.91m
  • Gayle Burleson (53yo)

    Senior Vice President of Business Development & Land

    • Tenure: 2.7yrs
  • Travis Counts (41yo)

    Senior VP

    • Tenure: 6.7yrs
  • Brenda Schroer (43yo)

    Senior VP

    • Tenure: 1yrs
  • Megan Hays

    VP of Investor Relations & Public Affairs

    • Tenure: 3yrs
  • Kang Chen

    VP & Chief Information Officer

    • Scott Kidwell (51yo)

      Senior Vice President of Administration

      • Tenure: 1yrs
    • Jacob Gobar (38yo)

      VP & Chief Accounting Officer

      • Tenure: 1yrs

    Board Members

    • John Surma (65yo)

      Independent Director

      • Tenure: 5.8yrs
      • Compensation: US$290.47k
    • Steve Gray (60yo)

      Independent Director

      • Tenure: 1.5yrs
      • Compensation: US$131.63k
    • Mark Puckett (67yo)

      Lead Independent Director

      • Compensation: US$330.47k
    • Tim Leach (59yo)

      Chairman of the Board & CEO

      • Tenure: 13.9yrs
      • Compensation: US$13.32m
    • Bill Easter (69yo)

      Independent Director

      • Tenure: 11.9yrs
      • Compensation: US$313.47k
    • Tucker Bridwell (67yo)

      Independent Director

      • Tenure: 13.9yrs
      • Compensation: US$290.47k
    • Gary Merriman (64yo)

      Independent Director

      • Tenure: 8yrs
      • Compensation: US$296.71k
    • Joe Wright (59yo)

      Director

      • Tenure: 2.7yrs
      • Compensation: US$5.46m
    • Steve Beal (60yo)

      Independent Director

      • Tenure: 13.9yrs
      • Compensation: US$309.63k
    • Susan Helms (61yo)

      Independent Director

      • Tenure: 2.8yrs
      • Compensation: US$290.47k

    Company Information

    Concho Resources Inc.'s company bio, employee growth, exchange listings and data sources


    Key Information

    • Name: Concho Resources Inc.
    • Ticker: CXO
    • Exchange: NYSE
    • Founded: 2006
    • Industry: Oil and Gas Exploration and Production
    • Sector: Energy
    • Market Cap: US$16.465b
    • Shares outstanding: 199.46m
    • Website: https://www.concho.com

    Number of Employees


    Location

    • Concho Resources Inc.
    • One Concho Center
    • 600 West Illinois Avenue
    • Midland
    • Texas
    • 79701
    • United States

    Listings

    TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
    CXONYSE (New York Stock Exchange)YesCommon StockUSUSDAug 2007
    KIJDB (Deutsche Boerse AG)YesCommon StockDEEURAug 2007
    CXO *BMV (Bolsa Mexicana de Valores)YesCommon StockMXMXNAug 2007
    0I2TLSE (London Stock Exchange)YesCommon StockGBUSDAug 2007
    C1XO34BOVESPA (Bolsa de Valores de Sao Paulo)BDR EACH REPR 2 COMBRBRLDec 2019

    Biography

    Concho Resources Inc., an independent oil and natural gas company, engages in the acquisition, development, and exploration of oil and natural gas properties in the United States. The company’s principal operating areas are located in the Permian Basin of southeast New Mexico and west Texas. As of December 31, 2018, its estimated proved reserves totaled 1.2 billion barrels of oil equivalent. The company was founded in 2006 and is headquartered in Midland, Texas. 


    Company Analysis and Financial Data Status

    All financial data provided by Standard & Poor's Capital IQ.
    DataLast Updated (UTC time)
    Company Analysis2020/01/26 00:22
    End of Day Share Price2020/01/24 00:00
    Earnings2019/09/30
    Annual Earnings2018/12/31


    Unless specified all financial data is based on a yearly period but updated quarterly. This is known as Trailing Twelve Month (TTM) or Last Twelve Month (LTM) Data. Learn more here.