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MGY

Magnolia Oil & Gas NYSE:MGY Stock Report

Last Price

US$24.28

Market Cap

US$5.2b

7D

3.8%

1Y

85.6%

Updated

18 Aug, 2022

Data

Company Financials +
MGY fundamental analysis
Snowflake Score
Valuation6/6
Future Growth1/6
Past Performance6/6
Financial Health5/6
Dividends3/6

MGY Stock Overview

Magnolia Oil & Gas Corporation engages in the acquisition, development, exploration, and production of oil, natural gas, and natural gas liquids reserves in the United States.

Magnolia Oil & Gas Competitors

Price History & Performance

Summary of all time highs, changes and price drops for Magnolia Oil & Gas
Historical stock prices
Current Share PriceUS$24.28
52 Week HighUS$30.31
52 Week LowUS$12.79
Beta2.13
1 Month Change11.68%
3 Month Change-0.98%
1 Year Change85.63%
3 Year Change137.11%
5 Year Change147.76%
Change since IPO142.80%

Recent News & Updates

Aug 12

Magnolia Oil & Gas: Let's Talk Investment Risk Management

Sometimes smaller low-debt companies, like Magnolia Oil & Gas, are safer investments than the larger companies. Magnolia Oil & Gas' small bolt-on acquisitions increase the safety of an acquisition strategy. The wells have extremely low breakeven points. The Eagle Ford has not had the takeaway issues and subsequent product discounting of the Permian. Management repurchased 2 million shares from a secondary offering by a large holder. (Note: This article was in the newsletter on June 14, 2022 and has been updated as needed.) There is a general feeling that smaller companies are riskier than larger companies when investors try to determine the relative risks of an investment. While that is generally true, there are smaller companies such as Magnolia Oil & Gas (MGY) that mitigate those small company risks effectively enough to compare very well with far larger companies that supposedly have more diversification and deeper management in their favor. Sometimes, those supposedly "riskier" smaller companies are a better bet on an upside that far outweighs the downside potential. Magnolia Oil & Gas Strategies To Minimize Risk (Magnolia Oil & Gas August 2022, Investor Presentation) For many potential (and actual) investors in the company, managing downside risk in a particularly volatile industry is a paramount consideration. This company tends to keep the financial leverage ratio well under 1. That is one of the most conservative ratios of all the companies I follow. It allows management to go shopping for deals during downturns when there are few buyers and lots of distressed sellers. That conservative ratio allows management to expand production at a time when it is particularly cost-effective to expand production. All of this allows for profitable growth to offset the normal downside pressure when commodity prices weaken. This company also has had the means to repurchase shares whenever management felt that was the thing to do. A share repurchase program adds to demand for the company stock. Therefore, a share repurchase program aids in reducing the downside risk of an investment. So many times, share repurchase programs are conducted at market tops. Those same companies have too much debt (and sometimes too much high-cost production) to repurchase shares when the stock price is very low. The organic growth combined with the bolt-on acquisitions and the share repurchase program have allowed this company to report some impressive per share growth rates. Mr. Market loves a growth story, and this company has posted one almost from the start. Those bolt-on acquisitions also minimize acquisition risk. The company buys small acquisitions which have a far better success rate, and it sticks to areas it knows best. This strategy when combined with the other management strategy makes this company a far lower risk investment than is normally the case for growing companies. Yet, the emphasis on low-cost production also allows for above-average profitability to ensure an above-average track record to add to potential purchasing interest in the stock. Probably the most obvious way to demonstrate faith in the future of the company was an unusually large purchase by the company of 2 million shares of stock from the recent offering by EnerVest of some of its shares to the public. Financially strong companies can do this, and it shows that management believes that the shares are cheap. That is in addition to open market purchases of stock in the program underway. This can also be interpreted as an attempt to bypass the period of stock price weakness that often follows a public offering of stock. It may well work too since it is the company repurchasing a significant number of shares of its own stock. Magnolia Oil & Gas Acreage Performance And Advantages (Magnolia Oil & Gas August 2022, Investor Presentation) Anytime an investor sees a breakeven point as low as what is shown above, then the company will be very profitable. This company is also likely to adequately cash flow during industry downturns. The Eagle Ford has a couple of advantages over the more sought-after Permian acreage. The takeaway capacity has long been adequate, and future takeaway issues are unlikely because there is no emphasis on this profitable basin. Therefore, growth is relatively tame, and midstream volume increases have so far been easily handled by the existing operators. The lack of attention has also (in the past) allowed the Eagle Ford production to sell at a premium to the benchmark. That has turned out to be a significant advantage to the Permian. Takeaway issues would develop to result in operators discounting the production while paying for expensive trucking to get the product to market. Given the continued attention to the Permian acreage and the production growth, it would not be out-of-line to predict that additional takeaway issues are likely to develop in the current upswing that results in more product discounting. Magnolia Oil & Gas Key Operating Costs And Margin (Magnolia Oil & Gas August 2022, Corporate Presentation) The first thing to note is that the low costs shown above back up the low breakeven price management states very well. Most breakeven costs imply a certain profit percentage (that is likely but does cover some expected complications). As the costs above demonstrate, the actual breakeven point on these wells without accounting for any risk is considerably lower. Furthermore, the single largest increase in costs was the royalties. Those costs go back down with the prices. Some of the other costs may also decline during periods of weak pricing. But the royalties are the most noticeable cost to vary with industry pricing. Another cost that is declining with company growth is the general and administrative costs. This is usually a sign of tight-fisted management. Along with this is another slide (not shown here) that shows a considerable increase in cash flow from the margin increase. There are a lot of companies that tout a great margin while mitigating a lack of production to lead to sufficient cash flow even with a great margin. This is a notorious practice among secondary recovery experts. As a result, I followed several of them to bankruptcy even with those great margins.

Aug 04
We Think Magnolia Oil & Gas (NYSE:MGY) Can Manage Its Debt With Ease

We Think Magnolia Oil & Gas (NYSE:MGY) Can Manage Its Debt With Ease

Legendary fund manager Li Lu (who Charlie Munger backed) once said, 'The biggest investment risk is not the volatility...

Aug 02

Magnolia Oil & Gas Q2 2022 Earnings Preview

Magnolia Oil & Gas (NYSE:MGY) is scheduled to announce Q2 earnings results on Wednesday, August 3rd, before market open. The consensus EPS Estimate is $1.15 (+105.4% Y/Y) and the consensus Revenue Estimate is $459.6M (+83.3% Y/Y). Over the last 2 years, MGY has beaten EPS estimates 38% of the time and has beaten revenue estimates 63% of the time. Over the last 3 months, EPS estimates have seen 4 upward revisions and 2 downward. Revenue estimates have seen 5 upward revisions and 2 downward.

Shareholder Returns

MGYUS Oil and GasUS Market
7D3.8%2.3%1.4%
1Y85.6%73.4%-8.4%

Return vs Industry: MGY exceeded the US Oil and Gas industry which returned 64.7% over the past year.

Return vs Market: MGY exceeded the US Market which returned -9% over the past year.

Price Volatility

Is MGY's price volatile compared to industry and market?
MGY volatility
MGY Average Weekly Movement8.1%
Oil and Gas Industry Average Movement8.9%
Market Average Movement7.6%
10% most volatile stocks in US Market17.1%
10% least volatile stocks in US Market3.1%

Stable Share Price: MGY is not significantly more volatile than the rest of US stocks over the past 3 months, typically moving +/- 8% a week.

Volatility Over Time: MGY's weekly volatility (8%) has been stable over the past year.

About the Company

FoundedEmployeesCEOWebsite
2017192Steve Chazenhttps://www.magnoliaoilgas.com

Magnolia Oil & Gas Corporation engages in the acquisition, development, exploration, and production of oil, natural gas, and natural gas liquids reserves in the United States. Its properties are located primarily in Karnes County and the Giddings Field in South Texas principally comprising the Eagle Ford Shale and the Austin Chalk formation. As of December 31, 2021, the company’s assets consisted of a total leasehold position of 4,71,263 net acres, including 23,785 net acres in Karnes and 4,47,478 net acres in the Giddings area, as well as holds 1,292 net wells with a total production capacity of 66.0 thousand barrels of oil equivalent per day.

Magnolia Oil & Gas Fundamentals Summary

How do Magnolia Oil & Gas's earnings and revenue compare to its market cap?
MGY fundamental statistics
Market CapUS$5.24b
Earnings (TTM)US$680.49m
Revenue (TTM)US$1.48b

6.7x

P/E Ratio

3.1x

P/S Ratio

Earnings & Revenue

Key profitability statistics from the latest earnings report
MGY income statement (TTM)
RevenueUS$1.48b
Cost of RevenueUS$170.23m
Gross ProfitUS$1.31b
Other ExpensesUS$628.96m
EarningsUS$680.49m

Last Reported Earnings

Jun 30, 2022

Next Earnings Date

n/a

Earnings per share (EPS)3.60
Gross Margin88.50%
Net Profit Margin45.99%
Debt/Equity Ratio30.7%

How did MGY perform over the long term?

See historical performance and comparison

Dividends

1.6%

Current Dividend Yield

8%

Payout Ratio
We’ve recently updated our valuation analysis.

Valuation

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

Valuation Score

6/6

Valuation Score 6/6

  • 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 MGY?

Other financial metrics that can be useful for relative valuation.

MGY 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/Revenue3.1x
Enterprise Value/EBITDA4x
PEG Ratio-0.9x

Price to Earnings Ratio vs Peers

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

MGY PE Ratio vs Peers
The above table shows the PE ratio for MGY vs its peers. Here we also display the market cap and forecasted growth for additional consideration.
CompanyPEEstimated GrowthMarket Cap
Peer Average11.6x
MUR Murphy Oil
11x-0.9%US$5.7b
DEN Denbury
12.8x9.3%US$4.6b
CHRD Chord Energy
16.6x30.7%US$5.7b
SM SM Energy
6.1x7.6%US$5.4b
MGY Magnolia Oil & Gas
6.7x-7.1%US$5.2b

Price-To-Earnings vs Peers: MGY is good value based on its Price-To-Earnings Ratio (6.7x) compared to the peer average (11.6x).


Price to Earnings Ratio vs Industry

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

Price-To-Earnings vs Industry: MGY is good value based on its Price-To-Earnings Ratio (6.7x) compared to the US Oil and Gas industry average (9.8x)


Price to Earnings Ratio vs Fair Ratio

What is MGY'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.

MGY PE Ratio vs Fair Ratio.
Fair Ratio
Current PE Ratio6.7x
Fair PE Ratio13.3x

Price-To-Earnings vs Fair Ratio: MGY is good value based on its Price-To-Earnings Ratio (6.7x) compared to the estimated Fair Price-To-Earnings Ratio (13.3x).


Share Price vs Fair Value

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

Below Fair Value: MGY ($24.28) is trading below our estimate of fair value ($33.01)

Significantly Below Fair Value: MGY 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 and analysts are within a statistically confident range of agreement.


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Future Growth

How is Magnolia Oil & Gas forecast to perform in the next 1 to 3 years based on estimates from 9 analysts?

Future Growth Score

1/6

Future Growth Score 1/6

  • Earnings vs Savings Rate

  • Earnings vs Market

  • High Growth Earnings

  • Revenue vs Market

  • High Growth Revenue

  • Future ROE


-7.1%

Forecasted annual earnings growth

Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: MGY's earnings are forecast to decline over the next 3 years (-7.1% per year).

Earnings vs Market: MGY's earnings are forecast to decline over the next 3 years (-7.1% per year).

High Growth Earnings: MGY's earnings are forecast to decline over the next 3 years.

Revenue vs Market: MGY's revenue is expected to decline over the next 3 years (-3.8% per year).

High Growth Revenue: MGY's revenue is forecast to decline over the next 3 years (-3.8% per year).


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: MGY's Return on Equity is forecast to be high in 3 years time (34.1%)


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Past Performance

How has Magnolia Oil & Gas performed over the past 5 years?

Past Performance Score

6/6

Past Performance Score 6/6

  • Quality Earnings

  • Growing Profit Margin

  • Earnings Trend

  • Accelerating Growth

  • Earnings vs Industry

  • High ROE


9.4%

Historical annual earnings growth

Earnings and Revenue History

Quality Earnings: MGY has high quality earnings.

Growing Profit Margin: MGY's current net profit margins (46%) are higher than last year (24.9%).


Past Earnings Growth Analysis

Earnings Trend: MGY has become profitable over the past 5 years, growing earnings by 9.4% per year.

Accelerating Growth: MGY's earnings growth over the past year (270.3%) exceeds its 5-year average (9.4% per year).

Earnings vs Industry: MGY earnings growth over the past year (270.3%) exceeded the Oil and Gas industry 184.6%.


Return on Equity

High ROE: MGY's Return on Equity (67.8%) is considered outstanding.


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Financial Health

How is Magnolia Oil & Gas's financial position?

Financial Health Score

5/6

Financial Health Score 5/6

  • Short Term Liabilities

  • Long Term Liabilities

  • Debt Level

  • Reducing Debt

  • Debt Coverage

  • Interest Coverage

Financial Position Analysis

Short Term Liabilities: MGY's short term assets ($750.5M) exceed its short term liabilities ($333.0M).

Long Term Liabilities: MGY's short term assets ($750.5M) exceed its long term liabilities ($485.2M).


Debt to Equity History and Analysis

Debt Level: MGY has more cash than its total debt.

Reducing Debt: Insufficient data to determine if MGY's debt to equity ratio has reduced over the past 5 years.

Debt Coverage: MGY's debt is well covered by operating cash flow (282.7%).

Interest Coverage: MGY's interest payments on its debt are well covered by EBIT (31x coverage).


Balance Sheet


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Dividend

What is Magnolia Oil & Gas's current dividend yield, its reliability and sustainability?

Dividend Score

3/6

Dividend Score 3/6

  • Notable Dividend

  • High Dividend

  • Stable Dividend

  • Growing Dividend

  • Earnings Coverage

  • Cash Flow Coverage


1.65%

Current Dividend Yield

Dividend Yield vs Market

Notable Dividend: MGY's dividend (1.65%) is higher than the bottom 25% of dividend payers in the US market (1.48%).

High Dividend: MGY's dividend (1.65%) is low compared to the top 25% of dividend payers in the US market (3.99%).


Stability and Growth of Payments

Stable Dividend: Too early to tell whether MGY's dividend payments have been stable as they only just started paying a dividend.

Growing Dividend: Too early to tell if MGY's dividend payments are increasing as they only just started paying a dividend.


Earnings Payout to Shareholders

Earnings Coverage: With its low payout ratio (8%), MGY's dividend payments are thoroughly covered by earnings.


Cash Payout to Shareholders

Cash Flow Coverage: With its low cash payout ratio (11.6%), MGY's dividend payments are thoroughly covered by cash flows.


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Management

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

4.0yrs

Average management tenure


CEO

Steve Chazen (75 yo)

5.5yrs

Tenure

US$349,162

Compensation

Mr. Stephen I. Chazen, also known as Steve, has been Director of National Park Foundation since 2019. He serves as Independent Chairman and Director of Occidental Petroleum Corporation since March 18, 2020...


CEO Compensation Analysis

Compensation vs Market: Steve's total compensation ($USD349.16K) is below average for companies of similar size in the US market ($USD8.19M).

Compensation vs Earnings: Steve's compensation has increased by more than 20% in the past year.


Leadership Team

Experienced Management: MGY's management team is considered experienced (4 years average tenure).


Board Members

Experienced Board: MGY's board of directors are considered experienced (5.3 years average tenure).


Ownership

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


Insider Trading Volume

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


Recent Insider Transactions

Ownership Breakdown

Dilution of Shares: Shareholders have not been meaningfully diluted in the past year.


Top Shareholders

Company Information

Magnolia Oil & Gas Corporation's employee growth, exchange listings and data sources


Key Information

  • Name: Magnolia Oil & Gas Corporation
  • Ticker: MGY
  • Exchange: NYSE
  • Founded: 2017
  • Industry: Oil and Gas Exploration and Production
  • Sector: Energy
  • Implied Market Cap: US$5.243b
  • Market Cap: US$4.585b
  • Shares outstanding: 217.56m
  • Website: https://www.magnoliaoilgas.com

Number of Employees


Location

  • Magnolia Oil & Gas Corporation
  • Nine Greenway Plaza
  • Suite 1300
  • Houston
  • Texas
  • 77046
  • United States

Listings


Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2022/08/18 00:00
End of Day Share Price2022/08/18 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.