Texas Pacific Land (TPL): Assessing Valuation After Stock Split Move to Boost Liquidity and Accessibility

Texas Pacific Land (TPL) just set the stage for a stock split, filing to more than triple its authorized common shares ahead of a December 22 effective date. The move is squarely aimed at liquidity and accessibility.

See our latest analysis for Texas Pacific Land.

The stock split news lands just as Texas Pacific Land’s 1 day share price return of 5.79 percent and 7 day share price return of 6.0 percent signal building short term momentum, even though its 1 year total shareholder return of negative 31.66 percent contrasts with a still impressive 5 year total shareholder return of 321.12 percent.

If this kind of catalyst has you thinking more broadly about opportunity, it could be a good time to explore fast growing stocks with high insider ownership for other fast moving names with conviction behind them.

Yet with Texas Pacific Land still down sharply over the past year despite solid multi year returns and healthy earnings growth, is the market overlooking a discounted compounder, or already baking in the next leg of its expansion?

Most Popular Narrative: 8.6% Overvalued

With Texas Pacific Land closing at $914.72 against a narrative fair value of $842.50, the story frames today’s price as running ahead of fundamentals.

The analysts have a consensus price target of $921.93 for Texas Pacific Land based on their expectations of its future earnings growth, profit margins and other risk factors.

In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be $895.3 million, earnings will come to $610.3 million, and it would be trading on a PE ratio of 41.9x, assuming you use a discount rate of 6.4 percent.

Read the complete narrative.

Want to see what kind of revenue surge, margin recovery, and lofty future multiple are stitched together to justify that gap? The full narrative lays it bare.

Result: Fair Value of $842.50 (OVERVALUED)

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

However, ongoing double digit growth in royalties and water services, supported by super majors and fixed fee easements, could sustain higher earnings than analysts expect.

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

Build Your Own Texas Pacific Land Narrative

If you see the story differently or want to dig into the numbers yourself, you can build a personalized view in just minutes: Do it your way.

A great starting point for your Texas Pacific Land research is our analysis highlighting 2 key rewards 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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