Sabine Royalty Trust (NYSE:SBR), a USD$662.63M small-cap, operates in the oil and gas industry which has seen an extended oil price slump since mid-2014. However, energy-sector analysts are forecasting for the entire industry, a strong double-digit growth of 10.78% in the upcoming year , and an overall negative growth rate in the next couple of years. Unsuprisingly, this is below the growth rate of the US stock market as a whole. Is the oil and gas industry an attractive sector-play right now? Below, I will examine the sector growth prospects, as well as evaluate whether Sabine Royalty Trust is lagging or leading its competitors in the industry. View our latest analysis for Sabine Royalty Trust
What’s the catalyst for Sabine Royalty Trust’s sector growth?
Is Sabine Royalty Trust and the sector relatively cheap?
What this means for you:
Are you a shareholder? Sabine Royalty Trust has been an oil and gas industry laggard in the past year. In addition to this, the stock is trading at a PE above its peers, meaning it is more expensive on a relative earnings basis. This may indicate it is the right time to sell out of the stock, if your initial investment thesis is around the growth prospects of Sabine Royalty Trust, since there are other oil and gas companies that have delivered higher growth, and are possibly trading at a cheaper price as well.
Are you a potential investor? If Sabine Royalty Trust has been on your watchlist for a while, now may be the best time to enter into the stock. Its lagging growth rate compared to its oil and gas peers in the near term doesn’t build up its investment thesis, and in addition to this, it is also trading at a PE above these companies. If growth and mispricing are important aspects for your investment thesis, there may be better investments in the energy sector.
For a deeper dive into Sabine Royalty Trust’s stock, take a look at the company’s latest free analysis report to find out more on its financial health and other fundamentals. Interested in other energy stocks instead? Use our free playform to see my list of over 300 other oil and gas companies trading on the market.