| Newfield Exploration’s Relative Valuation: A Peer Comparison | |
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Newfield Exploration Had a Bullish 2015 despite Low Energy Prices (Continued from Prior Part) Newfield Exploration’s relative valuation
In the previous part of this series, we compared Newfield Exploration’s (NFX) EV-to-EBITDA (enterprise value to earnings before interest, tax, depreciation, and amortization) multiple against its own historical levels. In this part, we’ll look at the company’s valuation against the multiples of its peers.
Forward EV-to-EBITDA
A peer group comparison shows that NFX’s forward EV-to-EBITDA multiple of ~6.3 is higher than those of some of its peers. Murphy Oil (MUR) is currently trading at a forward EV-to-EBITDA multiple of ~4x. Marathon Oil (MRO) is trading at a multiple of ~6.2x. Cimarex Energy (XEC) is trading at a higher multiple of ~10.3x.
When compared to the industry, NFX appears to be in-line with its peer average of ~6.7x. Together, these companies make up ~2.8% of the Energy Select Sector SPDR ETF (XLE).
Newfield Exploration’s returns
In terms of returns, NFX offers better returns when its profitability is scaled by its shareholder equity. This calculation is called ROE (return on equity). NFX’s ROE stands at ~-1.7%, which is a result of the company’s negative net earnings. Among the company’s peers, XEC has the lowest ROE at -~43%.
In a tough energy price environment, NFX’s positive stock performance is notable. Many of its peers have seen their stock prices fall significantly this year. Their EBITDA levels have plunged. For some of them, including Cabot Oil and Gas (COG), debt levels have been on the rise. Read Market Realist’s Cabot Oil and Gas’s Net Debt Is on the Rise to learn more.
NFX has managed to keep its EBITDA levels consistent. It has also taken steps to keep a check on its debt levels.
Continue to Next Part Browse this series on Market Realist:
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Cimarex Energy Co.
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CODE : XEC |
ISIN : US1717981013 |
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ProfileMarket IndicatorsVALUE : Projects & res.Press releasesAnnual reportRISK : Asset profileContact Cpy |
Cimarex Energy is a producing company based in United states of america. Cimarex Energy is listed in Germany and in United States of America. Its market capitalisation is US$ 8.3 billions as of today (€ 7.2 billions). Its stock quote reached its highest recent level on May 23, 2018 at US$ 99.89, and its lowest recent point on September 30, 2021 at US$ 87.20. Cimarex Energy has 95 438 121 shares outstanding. |