Undervalued energy companies, such as Seadrill Partners and Natural Resource Partners, are those that trade at a price below their actual values. There’s a few ways you can determine how much a company is actually worth. 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. The discrepancy between the price and value means investors have an opportunity to buy shares at a discount. Below are the stocks I believe are undervalued on all criteria, based on their latest financial data.
Seadrill Partners LLC (NYSE:SDLP)
Seadrill Partners LLC owns, operates, and acquires offshore drilling units. Founded in 2012, and now led by CEO Mark Morris, the company currently employs 1,100 people 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 actual level of $30.69, at a price tag of US$2.66, based on my discounted cash flow model. The difference between value and price signals a potential opportunity to buy SDLP shares at a discount. What’s even more appeal is that SDLP’s PE ratio is trading at around 1.73x relative to its Energy Services peer level of, 23.01x indicating that relative to its comparable company group, we can invest in SDLP at a lower price. SDLP also has a healthy balance sheet, with short-term assets covering liabilities in the near future as well as in the long run. The stock’s debt-to-equity ratio of 124.65% has been falling over the past couple of years demonstrating its capability to pay down its debt. Interested in Seadrill Partners? Find out more 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. Established in 2002, and currently lead by Corbin Robertson, the company provides employment to 243 people and with the company’s market cap sitting at USD $351.33M, it falls under the small-cap group.
NRP’s stock is now hovering at around -23% less than its actual worth of $37.7, at a price of US$28.95, based on its expected future cash flows. This mismatch signals an opportunity to buy NRP shares at a discount. In addition to this, NRP’s PE ratio is trading at 5.67x relative to its Oil and Gas peer level of, 11.95x implying that relative to its comparable set of companies, NRP can be bought at a cheaper price right now. NRP is also strong financially, as short-term assets amply cover upcoming and long-term liabilities.
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 established in 2007 and with the company’s market capitalisation at USD $404.62M, we can put it in the small-cap group.
CPLP’s stock is now floating at around -76% under its actual value of $12.8, at a price tag of US$3.09, based on its expected future cash flows. This price and value mismatch indicates a potential opportunity to buy the stock at a low price. In terms of relative valuation, CPLP’s PE ratio stands at 14.32x while its index peer level trades at, 18x indicating that relative to its comparable company group, you can buy CPLP’s shares at a cheaper price. CPLP is also in great financial shape, with near-term assets able to cover upcoming and long-term liabilities. The stock’s debt-to-equity ratio of 48.68% has been dropping for the past few years signalling CPLP’s ability to pay down its debt. Continue research on Capital Product Partners here.
For more financially sound, undervalued companies to add to your portfolio, explore this interactive list of undervalued stocks.
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.