Laredo Petroleum, Inc. (NYSE:LPI) is a stock with outstanding fundamental characteristics. When we build an investment case, we need to look at the stock with a holistic perspective. In the case of LPI, it is a financially-healthy company with a great history of performance, trading at a discount. Below, I've touched on some key aspects you should know on a high level. For those interested in understanding where the figures come from and want to see the analysis, read the full report on Laredo Petroleum here.
Undervalued with proven track record
Over the past few years, LPI has demonstrated a proven ability to generate robust returns of 27%. Unsurprisingly, LPI surpassed the Oil and Gas industry return of 13%, which gives us more confidence of the company's capacity to drive earnings going forward. LPI's ability to maintain an adequate level of cash to meet upcoming liabilities is a good sign for its financial health. This implies that LPI manages its cash and cost levels well, which is a crucial insight into the health of the company. LPI appears to have made good use of debt, producing operating cash levels of 0.52x total debt in the prior year. This is a strong indication that debt is reasonably met with cash generated.
LPI's share price is trading at below its true value, meaning that the market sentiment for the stock is currently bearish. This mispricing gives investors the opportunity to buy into the stock at a cheap price compared to the value they will be receiving, should analysts' consensus forecast growth be correct. Also, relative to the rest of its peers with similar levels of earnings, LPI's share price is trading below the group's average. This supports the theory that LPI is potentially underpriced.
For Laredo Petroleum, there are three fundamental factors you should further examine:
- Future Outlook: What are well-informed industry analysts predicting for LPI’s future growth? Take a look at our free research report of analyst consensus for LPI’s outlook.
- Dividend Income vs Capital Gains: Does LPI 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 LPI as an investment.
- Other Attractive Alternatives : Are there other well-rounded stocks you could be holding instead of LPI? 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.