Undervalued energy companies, such as Seadrill Partners and Natural Resource Partners, trade at a price less than their true values. There’s a few ways you can value a company. The most popular methods include discounting the company’s cash flows it is expected to create in the future, or comparing its price to its peers or the value of its assets. Analysing the most recent financial data, I’ve created a list of companies that compare favourably in all criteria, making them potentially good investments.
Seadrill Partners LLC (NYSE:SDLP)
Seadrill Partners LLC owns, operates, and acquires offshore drilling units. Founded in 2012, and currently lead by Mark Morris, the company now has 1,100 employees and with the company’s market capitalisation at USD $252.51M, we can put it in the small-cap stocks category.
SDLP’s stock is currently floating at around -91% below its intrinsic level of $30.69, at a price tag of US$2.66, based on its expected future cash flows. This discrepancy signals a potential opportunity to buy SDLP shares at a low price. In terms of relative valuation, SDLP’s PE ratio is trading at around 1.73x compared to its Energy Services peer level of, 23.01x meaning that relative to its competitors, SDLP can be bought at a cheaper price right now. SDLP is also in great financial shape, with current assets covering liabilities in the near term and over the long run. The stock’s debt-to-equity ratio of 124.65% has been declining over time, demonstrating SDLP’s ability to pay down its debt. Dig deeper into Seadrill Partners here.
Natural Resource Partners L.P. (NYSE:NRP)
Natural Resource Partners L.P., through its subsidiaries, owns, operates, manages, and leases mineral properties in the United States. Formed in 2002, and now led by CEO Corbin Robertson, the company size now stands at 243 people and with the market cap of USD $351.33M, it falls under the small-cap group.
NRP’s shares are now trading at -23% less than its actual value of $37.7, at the market price of US$28.95, according to my discounted cash flow model. This price and value mismatch indicates a potential opportunity to buy the stock at a low price. Also, NRP’s PE ratio is around 5.67x against its its Oil and Gas peer level of, 11.95x meaning that relative to its competitors, NRP’s stock can be bought at a cheaper price. NRP is also robust in terms of financial health, with short-term assets covering liabilities in the near future as well as in the long run. More detail on Natural Resource Partners here.
Capital Product Partners L.P. (NASDAQ:CPLP)
Capital Product Partners L.P., a shipping company, provides marine transportation services in Greece. Capital Product Partners was formed in 2007 and with the market cap of USD $404.62M, it falls under the small-cap group.
CPLP’s stock is now trading at -76% under its real value of $12.8, at the market price of US$3.09, based on my discounted cash flow model. The discrepancy signals an opportunity to buy low. Also, CPLP’s PE ratio is around 14.32x against its its index peer level of, 18x indicating that relative to its comparable company group, CPLP’s stock can be bought at a cheaper price. CPLP is also strong financially, with near-term assets able to cover upcoming and long-term liabilities. The stock’s debt-to-equity ratio of 48.68% has been falling for the past few years showing its capacity to pay down its debt. More detail on Capital Product Partners here.
For more financially sound, undervalued companies to add to your portfolio, explore this interactive list of undervalued stocks.