Assessing Diversified Energy (DEC) After Buybacks and a New Dividend: Does the Valuation Reflect Its Cash Returns?

Diversified Energy (DEC) has been quietly reshaping its equity story, leaning on buybacks and dividends rather than splashy headlines. Recent share repurchases and a declared quarterly payout put the spotlight squarely on shareholder returns.

See our latest analysis for Diversified Energy.

Even with steady buybacks and that fresh dividend, the 30 day share price return of minus 6.2 percent and year to date share price return of minus 21.7 percent suggest sentiment is still cautious, despite a less severe 1 year total shareholder return decline.

If you are weighing DEC against other opportunities in the market, this could be a good time to broaden your search and explore fast growing stocks with high insider ownership.

With the share price well below analyst targets and trading at a steep implied discount to intrinsic value, should investors treat Diversified Energy as a mispriced cash return story, or is the market already discounting its future growth?

Price-to-Sales of 1x: Is it justified?

Based on a price-to-sales ratio of 1x versus both peers and the wider Oil and Gas industry, Diversified Energy's last close appears materially discounted.

The price-to-sales multiple compares the market value of the company to the revenue it generates, a useful yardstick for asset heavy, often volatile energy producers where earnings can swing with commodity prices. For DEC, a 1x ratio signals the market is valuing each dollar of its revenue stream at a notable discount.

Against the US Oil and Gas industry average of 1.4x, DEC's 1x price-to-sales looks meaningfully cheaper, and the gap is even starker versus a 17x peer average, implying investors may be heavily discounting its future or overlooking its forecast return to profitability. Our fair price-to-sales estimate of 1.4x points to a level the market could ultimately gravitate toward if those forecasts are delivered.

Explore the SWS fair ratio for Diversified Energy

Result: Price-to-Sales of 1x (UNDERVALUED)

However, persistent net losses, alongside a multi year share price slide, could signal deeper operational issues, limiting any upside from valuation rerating or cash returns.

Find out about the key risks to this Diversified Energy narrative.

Another View: Our DCF Lens

While the 1x price to sales ratio hints at value, our DCF model is far more aggressive. It suggests DEC is trading about 86.8 percent below its fair value estimate of 104.22 dollars. If that gap is even half right, is the market missing a deep value turnaround?

Look into how the SWS DCF model arrives at its fair value.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Diversified Energy for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover 914 undervalued stocks based on their cash flows. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Build Your Own Diversified Energy Narrative

If you see the numbers differently or want to dig into the details yourself, you can build a complete narrative in minutes: Do it your way.

A great starting point for your Diversified Energy research is our analysis highlighting 3 key rewards and 3 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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