Texas Pacific Land (TPL): Assessing Valuation After Q3 2025 Earnings and Revenue Miss Spurs Market Reaction

Texas Pacific Land (TPL) reported third-quarter 2025 results that came in below expectations for both earnings and revenue. Still, the stock drew attention in premarket trading and prompted fresh consideration of the company’s current valuation.

See our latest analysis for Texas Pacific Land.

Texas Pacific Land’s share price has faced heavy pressure this year, with a year-to-date decline of almost 27% and a sharp 47% dip in the total shareholder return over the past twelve months. While the disappointing third-quarter results and volatile recent trading mark a tough patch, the company’s impressive 350% five-year total return serves as a reminder that big swings, both up and down, have been part of its story. Momentum appears to be fading for now as investors recalculate potential risks and rewards.

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With Texas Pacific Land’s stock now trading well below its highs and analysts forecasting further downside, investors are left wondering whether recent declines signal an undervalued opportunity or if the market is fully pricing in future risks and rewards.

Most Popular Narrative: 6.4% Undervalued

Texas Pacific Land’s most widely followed narrative estimates a fair value above the last close price, suggesting the market may be overlooking long-term potential. The focus is on robust future earnings and resilience despite recent share price volatility.

Expansion and diversification of the water services segment—characterized by consistent double-digit revenue growth, increasing volume gains, and structural demand tailwinds from rising produced water volumes due to deeper drilling—suggest durable, high-margin revenue streams beyond oil/gas royalties. This may help mitigate earnings volatility and support long-term cash flow.

Read the complete narrative.

Curious what underpins this optimistic estimate? One factor is a bold set of projections for both margin expansion and earnings, paired with valuation multiples rarely seen in this sector. Want to see exactly which financial forecasts tilt the balance? Go beneath the headlines to unpack the numbers driving this contested fair value.

Result: Fair Value of $921.93 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, persistent regulatory scrutiny of water resources and a structural slowdown in Permian Basin production could quickly challenge even the most optimistic forecasts.

Find out about the key risks to this Texas Pacific Land narrative.

Another View: What Does Our DCF Model Suggest?

While analyst consensus points to a fair value above the latest share price, our SWS DCF model tells a different story. According to this cash flow-based approach, Texas Pacific Land may actually be overvalued right now. The models are clashing: is the market missing something, or are the risks being overlooked?

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 Texas Pacific Land 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 927 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 Texas Pacific Land Narrative

Prefer a different perspective or want to dig into the numbers on your own? You can craft a personal narrative using the data in just a few minutes. Do it your way.

A great starting point for your Texas Pacific Land research is our analysis highlighting 1 key reward and 1 important warning sign 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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