I’ve been keeping an eye on Diamondback Energy, Inc. (NASDAQ:FANG) because I’m attracted to its fundamentals. Looking at the company as a whole, as a potential stock investment, I believe FANG has a lot to offer. Basically, it is a financially-healthy company with a strong history and an optimistic growth outlook. In the following section, I expand a bit more on these key aspects. For those interested in understanding where the figures come from and want to see the analysis, read the full report on Diamondback Energy here.
High growth potential and good value
One reason why investors are attracted to FANG is its notable earnings growth potential in the near future of 24%. This growth in the bottom-line is bolstered by an equally impressive top-line expansion over the same period, which is a sustainable driver of high-quality earnings, as opposed to pure cost-cutting activities. In the previous year, FANG has ramped up its bottom line by 75%, with its latest earnings level surpassing its average level over the last five years. Not only did FANG outperformed its past performance, its growth also exceeded the Oil and Gas industry expansion, which generated a 61% earnings growth. This is an notable feat for the company.
With a debt-to-equity ratio of 32%, FANG’s debt level is reasonable. This indicates a good balance between taking advantage of low cost funding through debt financing, but having enough financial flexibility and headroom to grow debt in the future. FANG seems to have put its debt to good use, generating operating cash levels of 0.35x total debt in the most recent year. This is also a good indication as to whether debt is properly covered by the company’s cash flows.
For Diamondback Energy, I’ve put together three essential aspects you should further examine:
- Valuation: What is FANG worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether FANG is currently mispriced by the market.
- Dividend Income vs Capital Gains: Does FANG return gains to shareholders through reinvesting in itself and growing earnings, or redistribute a decent portion of earnings as dividends? Our historical dividend yield visualization quickly tells you what your can expect from FANG as an investment.
- Other Attractive Alternatives : Are there other well-rounded stocks you could be holding instead of FANG? Explore our interactive list of stocks with large potential to get an idea of what else is out there you may be missing!
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at email@example.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.