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ESTE

Earthstone Energy NYSE:ESTE Stock Report

Last Price

US$11.24

Market Cap

US$1.6b

7D

-20.2%

1Y

29.8%

Updated

24 Sep, 2022

Data

Company Financials +
ESTE fundamental analysis
Snowflake Score
Valuation5/6
Future Growth2/6
Past Performance2/6
Financial Health2/6
Dividends0/6

ESTE Stock Overview

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

Earthstone Energy Competitors

Price History & Performance

Summary of all time highs, changes and price drops for Earthstone Energy
Historical stock prices
Current Share PriceUS$11.24
52 Week HighUS$22.25
52 Week LowUS$8.71
Beta2.05
1 Month Change-30.79%
3 Month Change-16.80%
1 Year Change29.79%
3 Year Change232.54%
5 Year Change2.28%
Change since IPO3,496.80%

Recent News & Updates

Sep 19
These 4 Measures Indicate That Earthstone Energy (NYSE:ESTE) Is Using Debt Extensively

These 4 Measures Indicate That Earthstone Energy (NYSE:ESTE) Is Using Debt Extensively

The external fund manager backed by Berkshire Hathaway's Charlie Munger, Li Lu, makes no bones about it when he says...

Aug 28

Earthstone Energy: Market Perceived Risk Climbing

Summary Earthstone Energy's Titus acquisition was announced to a lukewarm market reception. The company is rapidly growing. Rapid growth has its own risks. The ability to service the rapidly growing debt load is a concern. Debt repayment along the lines of management guidance will be a priority. This management has the experience to rapidly grow and optimally combine a company. (Note: This article was in the newsletter on July 1, 2022, and has been updated as needed.) Earthstone Energy (ESTE) had announced the Titus acquisition. This comes after several significant acquisitions that have enlarged the company to several times the size before the shopping spree began. The stock price is beginning to reflect concerns about so many acquisitions as well as the handling of more stock outstanding. Investors need to keep in mind that sellers that receive stock often sell that stock. That will depress the stock price until the large seller exits. The market also has concerns about management making so many significant acquisitions in such a small space of time. This management may prove those worries unfounded as because the management has built and sold companies before. Nonetheless, it is clear that the market is factoring more risk into the stock price. Earthstone Energy Titus Acquisition Benefits (Earthstone Energy Titus Acquisition Presentation June 2022.) The current debt measures shown above are clearly conservative. The worry is that debt is growing at a very fast rate and the company is rapidly expanding. Therefore, the reported trailing debt ratio will not reflect the numbers above until a full year of operations with all the acquisitions is reported. This market is seeing ghosts all over the place. Nothing is a worse nightmare for the market than a high debt ratio. Even though there is production on the latest purchased leases (and hence established cash flow), management still has to report essentially mixed numbers until the company operates one year. The market is concerned when there is one major acquisition about risks like the logistics of combining major acquisitions into an optimal combination. Here, there are now several large acquisitions. So those concerns are beginning to multiply. Earthstone Energy Publicly Traded Stock Price History And Key Valuation Measures (Seeking Alpha Website August 27, 2022) Clearly the market reaction to the latest acquisition announcement has been less than stellar. Some of that has to do with the recent decline in the price of oil and other market worries about the industry. Another worry is that the series of transactions is creating large shareholders from the stock issued through these transactions. One of these, Warburg Pincus just announced holding a sizable amount of stock. A large shareholder can depress the price of the stock considerably until the sales pressure declines. This company has issued a lot of stock to acquire a fair number of properties. An additional risk is that some of those large sellers will liquidate their holdings to delay an appreciation of the stock when combined results would indicate a stock price rally. But the accelerating pace of debt growth also has the market worried. The first order of business will likely be to pay down that debt as quickly as possible. Admittedly, management may use some of the cash flow initially to combine the acquisitions and optimize operations. But if the cash flow is as generous as management states, then debt repayment should begin rather quickly. This is a notoriously low visibility industry that often has unpleasant surprises. Even though the current recovery appears to be sustainable for a while, long term readers know we have been down that road before only to be quickly disappointed. Therefore, it may be time to slow down the shopping spree to allow the market to see the benefits of the "new" Earthstone Energy. Probably a concern is not the debt ratio in the current pricing environment, but the debt ratio when commodity prices are much lower. Having gone through some severe situations in both 2008 and 2020 (and less severe ones like 2015), this market has an increasingly concerned view of debt. On top of that, the market has been disappointed by the "one decision" stocks that are no longer as "safe" as the market thought they were. This generally leads towards a swing towards safety where Mr. Market goes overboard as usual. That means that the management experience may not be valued as it would in other market climates (or situation). Earthstone Energy Valuation Method Cushion (Earthstone Energy Titus Acquisition Presentation June 2022.) Management is clearly countering these concerns by explaining the valuation method that they use. It does help that many of these acquisitions arrive with infrastructure and transportation commitments in place. Most likely the company retains necessary personnel as well because this reduces the risk of new personnel that are not familiar with the lease operations. The real key for the market will be the performance of the company during the next downturn. All the acquisitions have made this a materially new company without a public operating history. Therefore, investors should expect some stock pricing actions along the lines of other new issues (rather than an established company) until there is ample evidence of superior performance. Earthstone Energy Comparison Of All-In Costs (Earthstone Energy Second Quarter 2022, Corporate Presentation) One of the keys to better market performance will be the maintenance of the low costs shown above combined with at least expected well performance data. If management is able to keep up with the technology changes sweeping the industry to maintain the cost leadership shown above, then superior pricing action is likely to result. Management has clearly acquired some excellent acreage. The worries would be about the logistics that rapid growth entails. An inexperienced management can easily lose control of costs or quality (which would cost customers fast in a commodity business). This is also part of the worry about servicing the debt. The Future The stock price is likely to underperform the rest of the industry until it is apparent that management can report satisfactory (or better) results from the combined company. This latest acquisition is supposed to add economies of scale in one of the more profitable regions of the Permian. Many times, synergies are hard for individual investors to ascertain. But what will get the market attention is wide margins, low costs, and of course above average profitability.

Aug 24
Calculating The Intrinsic Value Of Earthstone Energy, Inc. (NYSE:ESTE)

Calculating The Intrinsic Value Of Earthstone Energy, Inc. (NYSE:ESTE)

How far off is Earthstone Energy, Inc. ( NYSE:ESTE ) from its intrinsic value? Using the most recent financial data...

Shareholder Returns

ESTEUS Oil and GasUS Market
7D-20.2%-9.3%-5.2%
1Y29.8%36.4%-23.0%

Return vs Industry: ESTE underperformed the US Oil and Gas industry which returned 36.4% over the past year.

Return vs Market: ESTE exceeded the US Market which returned -23.1% over the past year.

Price Volatility

Is ESTE's price volatile compared to industry and market?
ESTE volatility
ESTE Average Weekly Movement10.1%
Oil and Gas Industry Average Movement8.0%
Market Average Movement6.9%
10% most volatile stocks in US Market15.8%
10% least volatile stocks in US Market2.8%

Stable Share Price: ESTE is not significantly more volatile than the rest of US stocks over the past 3 months, typically moving +/- 10% a week.

Volatility Over Time: ESTE's weekly volatility (10%) has been stable over the past year.

About the Company

FoundedEmployeesCEOWebsite
196981Robert Andersonhttps://www.earthstoneenergy.com

Earthstone Energy, Inc., an independent oil and gas company, engages in the acquisition, exploration, development, and production of oil and natural gas properties in the United States. The company’s asset portfolio includes the Midland Basin of West Texas, Delaware Basin in New Mexico, and the Eagle Ford trend of south Texas. As of December 31, 2021, it operated 120 gross Eagle Ford wells, as well as had 147,587 thousand barrels of oil equivalent (MBOE) of total proved reserves comprised 93,575 MBOE of proved developed reserves and 54,012 MBOE of proved undeveloped reserves.

Earthstone Energy Fundamentals Summary

How do Earthstone Energy's earnings and revenue compare to its market cap?
ESTE fundamental statistics
Market CapUS$1.60b
Earnings (TTM)US$161.60m
Revenue (TTM)US$923.10m

7.5x

P/E Ratio

1.3x

P/S Ratio

Earnings & Revenue

Key profitability statistics from the latest earnings report
ESTE income statement (TTM)
RevenueUS$923.10m
Cost of RevenueUS$162.59m
Gross ProfitUS$760.52m
Other ExpensesUS$598.92m
EarningsUS$161.60m

Last Reported Earnings

Jun 30, 2022

Next Earnings Date

n/a

Earnings per share (EPS)1.49
Gross Margin82.39%
Net Profit Margin17.51%
Debt/Equity Ratio51.3%

How did ESTE perform over the long term?

See historical performance and comparison
We’ve recently updated our valuation analysis.

Valuation

Is ESTE undervalued compared to its fair value, analyst forecasts and its price relative to the market?

Valuation Score

5/6

Valuation Score 5/6

  • Price-To-Earnings vs Peers

  • Price-To-Earnings vs Industry

  • Price-To-Earnings vs Fair Ratio

  • Below Fair Value

  • Significantly Below Fair Value

  • Analyst Forecast

Key Valuation Metric

Which metric is best to use when looking at relative valuation for ESTE?

Other financial metrics that can be useful for relative valuation.

ESTE key valuation metrics and ratios. From Price to Earnings, Price to Sales and Price to Book to Price to Earnings Growth Ratio, Enterprise Value and EBITDA.
Key Statistics
Enterprise Value/Revenue2.9x
Enterprise Value/EBITDA5.7x
PEG Ratio0.6x

Price to Earnings Ratio vs Peers

How does ESTE's PE Ratio compare to its peers?

ESTE PE Ratio vs Peers
The above table shows the PE ratio for ESTE vs its peers. Here we also display the market cap and forecasted growth for additional consideration.
CompanyPEEstimated GrowthMarket Cap
Peer Average9.4x
CPE Callon Petroleum
2.4x-2.8%US$2.0b
MNRL Brigham Minerals
12.7x-3.9%US$1.5b
NOG Northern Oil and Gas
10.5x35.4%US$2.0b
CRK Comstock Resources
11.9x39.7%US$3.8b
ESTE Earthstone Energy
7.5x13.4%US$1.6b

Price-To-Earnings vs Peers: ESTE is good value based on its Price-To-Earnings Ratio (7.5x) compared to the peer average (9.4x).


Price to Earnings Ratio vs Industry

How does ESTE's PE Ratio compare vs other companies in the US Oil and Gas Industry?

Price-To-Earnings vs Industry: ESTE is good value based on its Price-To-Earnings Ratio (7.5x) compared to the US Oil and Gas industry average (8.2x)


Price to Earnings Ratio vs Fair Ratio

What is ESTE's PE Ratio compared to its Fair PE Ratio? This is the expected PE Ratio taking into account the company's forecast earnings growth, profit margins and other risk factors.

ESTE PE Ratio vs Fair Ratio.
Fair Ratio
Current PE Ratio7.5x
Fair PE Ratio17.2x

Price-To-Earnings vs Fair Ratio: ESTE is good value based on its Price-To-Earnings Ratio (7.5x) compared to the estimated Fair Price-To-Earnings Ratio (17.2x).


Share Price vs Fair Value

What is the Fair Price of ESTE when looking at its future cash flows? For this estimate we use a Discounted Cash Flow model.

Below Fair Value: ESTE ($11.24) is trading below our estimate of fair value ($14.28)

Significantly Below Fair Value: ESTE is trading below fair value by more than 20%.


Analyst Price Targets

What is the analyst 12-month forecast and do we have any statistical confidence in the consensus price target?

Analyst Forecast: Target price is more than 20% higher than the current share price, but analysts are not within a statistically confident range of agreement.


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Future Growth

How is Earthstone Energy forecast to perform in the next 1 to 3 years based on estimates from 5 analysts?

Future Growth Score

2/6

Future Growth Score 2/6

  • Earnings vs Savings Rate

  • Earnings vs Market

  • High Growth Earnings

  • Revenue vs Market

  • High Growth Revenue

  • Future ROE


13.4%

Forecasted annual earnings growth

Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: ESTE's forecast earnings growth (13.4% per year) is above the savings rate (1.9%).

Earnings vs Market: ESTE's earnings (13.4% per year) are forecast to grow slower than the US market (14.7% per year).

High Growth Earnings: ESTE's earnings are forecast to grow, but not significantly.

Revenue vs Market: ESTE's revenue (10.6% per year) is forecast to grow faster than the US market (7.6% per year).

High Growth Revenue: ESTE's revenue (10.6% per year) is forecast to grow slower than 20% per year.


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: Insufficient data to determine if ESTE's Return on Equity is forecast to be high in 3 years time


Discover growth companies

Past Performance

How has Earthstone Energy performed over the past 5 years?

Past Performance Score

2/6

Past Performance Score 2/6

  • Quality Earnings

  • Growing Profit Margin

  • Earnings Trend

  • Accelerating Growth

  • Earnings vs Industry

  • High ROE


38.8%

Historical annual earnings growth

Earnings and Revenue History

Quality Earnings: ESTE has a high level of non-cash earnings.

Growing Profit Margin: ESTE became profitable in the past.


Past Earnings Growth Analysis

Earnings Trend: ESTE has become profitable over the past 5 years, growing earnings by 38.8% per year.

Accelerating Growth: ESTE has become profitable in the last year, making the earnings growth rate difficult to compare to its 5-year average.

Earnings vs Industry: ESTE has become profitable in the last year, making it difficult to compare its past year earnings growth to the Oil and Gas industry (184.6%).


Return on Equity

High ROE: ESTE's Return on Equity (14%) is considered low.


Discover strong past performing companies

Financial Health

How is Earthstone Energy's financial position?

Financial Health Score

2/6

Financial Health Score 2/6

  • Short Term Liabilities

  • Long Term Liabilities

  • Debt Level

  • Reducing Debt

  • Debt Coverage

  • Interest Coverage

Financial Position Analysis

Short Term Liabilities: ESTE's short term assets ($269.4M) do not cover its short term liabilities ($432.5M).

Long Term Liabilities: ESTE's short term assets ($269.4M) do not cover its long term liabilities ($1.0B).


Debt to Equity History and Analysis

Debt Level: ESTE's net debt to equity ratio (51.2%) is considered high.

Reducing Debt: ESTE's debt to equity ratio has increased from 10.9% to 51.3% over the past 5 years.

Debt Coverage: ESTE's debt is well covered by operating cash flow (50.9%).

Interest Coverage: ESTE's interest payments on its debt are well covered by EBIT (11.1x coverage).


Balance Sheet


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Dividend

What is Earthstone Energy current dividend yield, its reliability and sustainability?

Dividend Score

0/6

Dividend Score 0/6

  • Notable Dividend

  • High Dividend

  • Stable Dividend

  • Growing Dividend

  • Earnings Coverage

  • Cash Flow Coverage

Dividend Yield vs Market

Notable Dividend: Unable to evaluate ESTE's dividend yield against the bottom 25% of dividend payers, as the company has not reported any recent payouts.

High Dividend: Unable to evaluate ESTE's dividend yield against the top 25% of dividend payers, as the company has not reported any recent payouts.


Stability and Growth of Payments

Stable Dividend: Insufficient data to determine if ESTE's dividends per share have been stable in the past.

Growing Dividend: Insufficient data to determine if ESTE's dividend payments have been increasing.


Earnings Payout to Shareholders

Earnings Coverage: Insufficient data to calculate payout ratio to determine if its dividend payments are covered by earnings.


Cash Payout to Shareholders

Cash Flow Coverage: Unable to calculate sustainability of dividends as ESTE has not reported any payouts.


Discover strong dividend paying companies

Management

How experienced are the management team and are they aligned to shareholders interests?

5.1yrs

Average management tenure


CEO

Robert Anderson (60 yo)

4.42yrs

Tenure

US$3,249,700

Compensation

Mr. Robert J. Anderson has been the President of Earthstone Energy, Inc. since April 2, 2018 and serves as its Chief Executive Officer since April 01, 2020 and serves as its Director since July 20, 2021. H...


CEO Compensation Analysis

Compensation vs Market: Robert's total compensation ($USD3.25M) is below average for companies of similar size in the US market ($USD5.62M).

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


Leadership Team

Experienced Management: ESTE's management team is seasoned and experienced (5.1 years average tenure).


Board Members

Experienced Board: ESTE's board of directors are considered experienced (6.8 years average tenure).


Ownership

Who are the major shareholders and have insiders been buying or selling?


Insider Trading Volume

Insider Buying: ESTE insiders have bought more shares than they have sold in the past 3 months.


Recent Insider Transactions

NYSE:ESTE Recent Insider Transactions by Companies or Individuals
DateValueNameEntityRoleSharesMax Price
14 Jul 22SellUS$288,759Azure Energy, LLCCompany26,132US$11.05
06 Jul 22BuyUS$235,963Jay JoliatIndividual20,237US$11.66
12 Apr 22SellUS$239,575Jay JoliatIndividual17,500US$13.69
12 Apr 22SellUS$685,500Tony OviedoIndividual50,000US$13.71
16 Mar 22SellUS$612,000Azure Energy, LLCCompany50,000US$12.24
06 Oct 21SellUS$530,000Azure Energy, LLCCompany50,000US$10.60

Ownership Breakdown

Dilution of Shares: Shareholders have been substantially diluted in the past year, with total shares outstanding growing by 67.9%.


Top Shareholders

Top 25 shareholders own 79.29% of the company
OwnershipNameSharesCurrent ValueChange %Portfolio %
20.43%
EnCap Investments L.P.
22,122,820$248.7m860.61%24.22%
15.81%
Warburg Pincus LLC
17,123,211$192.5m-26.77%4.02%
9.25%
Cypress Investments, LLC
10,017,213$112.6m117.21%no data
5.22%
Bighorn Permian Resources, LLC
5,650,977$63.5m0%no data
3.19%
Ontario Teachers' Pension Plan Board
3,449,699$38.8m0%0.36%
2.72%
State Street Global Advisors, Inc.
2,947,629$33.1m428.6%no data
2.58%
BlackRock, Inc.
2,794,381$31.4m46.69%no data
2.27%
The Vanguard Group, Inc.
2,463,287$27.7m93.61%no data
2.19%
Wp Energy Irh Holdings, L.P.
2,372,494$26.7m-25.39%no data
1.77%
Dimensional Fund Advisors LP
1,917,220$21.5m12.59%0.01%
1.72%
Macquarie Investment Management Business Trust
1,864,917$21.0m20.62%0.02%
1.68%
Ranger Investment Management, L.P.
1,819,533$20.5m66.06%1.69%
1.44%
William Blair Investment Management, LLC
1,556,609$17.5m-2.59%0.03%
1.16%
American Century Investment Management Inc
1,261,256$14.2m7.61%0.01%
0.98%
Lord, Abbett & Co. LLC
1,058,094$11.9m17576.14%0.05%
0.9%
Penn Capital Management Company, LLC
969,916$10.9m15.33%1.29%
0.78%
New York State Common Retirement Fund
847,810$9.5m-18.09%0.01%
0.76%
Geode Capital Management, LLC
819,649$9.2m59.38%no data
0.76%
Rothschild & Co Asset Management US Inc.
818,262$9.2m20.95%0.14%
0.75%
GW&K Investment Management, LLC
816,446$9.2m124548.24%0.11%
0.75%
Royce & Associates, LP
815,738$9.2m-30.81%0.09%
0.61%
Redwood Investments, LLC
656,339$7.4m0%0.88%
0.56%
Ray Singleton
606,735$6.8m0.49%no data
0.54%
Invesco Capital Management LLC
587,715$6.6m26.33%0.01%
0.47%
Northern Trust Global Investments
511,102$5.7m44.64%no data

Company Information

Earthstone Energy, Inc.'s employee growth, exchange listings and data sources


Key Information

  • Name: Earthstone Energy, Inc.
  • Ticker: ESTE
  • Exchange: NYSE
  • Founded: 1969
  • Industry: Oil and Gas Exploration and Production
  • Sector: Energy
  • Implied Market Cap: US$1.602b
  • Market Cap: US$1.217b
  • Shares outstanding: 142.56m
  • Website: https://www.earthstoneenergy.com

Number of Employees


Location

  • Earthstone Energy, Inc.
  • 1400 Woodloch Forest Drive
  • Suite 300
  • The Woodlands
  • Texas
  • 77380
  • United States


Listings

TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
ESTENYSE (New York Stock Exchange)YesClass A Common StockUSUSDDec 1972
BSC2DB (Deutsche Boerse AG)YesClass A Common StockDEEURDec 1972

Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2022/09/24 00:00
End of Day Share Price2022/09/23 00:00
Earnings2022/06/30
Annual Earnings2021/12/31


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.