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Shares of Cimarex Energy (XEC) have been strong performers lately, with the stock up 19.6% over the past month. The stock hit a new 52-week high of $77.3 in the previous session. Cimarex Energy has gained 98.8% since the start of the year compared to the 21.3% move for the Zacks Oils-Energy sector and the 74% return for the Zacks Oil and Gas - Exploration and Production - United States industry.
What's Driving the Outperformance?
The stock has an impressive record of positive earnings surprises, as it hasn't missed our earnings consensus estimate in any of the last four quarters. In its last earnings report on August 5, 2021, Cimarex reported EPS of $2.09 versus consensus estimate of $1.87.
For the current fiscal year, Cimarex is expected to post earnings of $8.88 per share on $2.76 billion in revenues. This represents a 538.85% change in EPS on a 77.24% change in revenues. For the next fiscal year, the company is expected to earn $10.05 per share on $2.96 billion in revenues. This represents a year-over-year change of 13.17% and 7.11%, respectively.
Cimarex may be at a 52-week high right now, but what might the future hold for the stock? A key aspect of this question is taking a look at valuation metrics in order to determine if the company has run ahead of itself.
On this front, we can look at the Zacks Style Scores, as these give investors a variety of ways to comb through stocks (beyond looking at the Zacks Rank of a security). These styles are represented by grades running from A to F in the categories of Value, Growth, and Momentum, while there is a combined VGM Score as well. Investors should consider the style scores a valuable tool that can help you to pick the most appropriate Zacks Rank stocks based on their individual investment style.
Cimarex has a Value Score of C. The stock's Growth and Momentum Scores are B and B, respectively, giving the company a VGM Score of B.
In terms of its value breakdown, the stock currently trades at 8.4X current fiscal year EPS estimates. On a trailing cash flow basis, the stock currently trades at 4.9X versus its peer group's average of 4.9X. Additionally, the stock has a PEG ratio of 0.5. This isn't enough to put the company in the top echelon of all stocks we cover from a value perspective.
We also need to look at the Zacks Rank for the stock, as this supersedes any trend on the style score front. Fortunately, Cimarex currently has a Zacks Rank of #2 (Buy) thanks to favorable earnings estimate revisions from covering analysts.
Since we recommend that investors select stocks carrying Zacks Rank of 1 (Strong Buy) or 2 (Buy) and Style Scores of A or B, it looks as if Cimarex passes the test. Thus, it seems as though Cimarex shares could still be poised for more gains ahead.
How Does Cimarex Stack Up to the Competition?
Shares of Cimarex have been rising, and the company still appears to be a decent choice, but what about the rest of the industry? Some of its industry peers are also impressive, including Goodrich Petroleum (GDP), SilverBow Resources (SBOW), and Cheniere Energy (LNG), all of which currently have a Zacks Rank of at least #2 and a VGM Score of at least B, making them well-rounded choices.
The Zacks Industry Rank is in the top 15% of all the industries we have in our universe, so it looks like there are some nice tailwinds for Cimarex, even beyond its own solid fundamental situation.
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Cimarex Energy Co (XEC) : Free Stock Analysis Report
Cheniere Energy, Inc. (LNG) : Free Stock Analysis Report
Goodrich Petroleum Corporation (GDP) : Free Stock Analysis Report
SilverBow Resources Inc. (SBOW) : Free Stock Analysis Report
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