I’ve been keeping an eye on Earthstone Energy, Inc. (NYSE:ESTE) because I’m attracted to its fundamentals. Looking at the company as a whole, as a potential stock investment, I believe ESTE has a lot to offer. Basically, it is a financially-healthy company with a an optimistic future outlook, not yet reflected in the share price. 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 Earthstone Energy here.
Good value with reasonable growth potential
ESTE is currently trading below its true value, which means the market is undervaluing the company’s expected cash flow going forward. 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. Compared to the rest of the oil and gas industry, ESTE is also trading below its peers of similar sizes in terms of their assets. This further reaffirms that ESTE is potentially undervalued.
ESTE’s debt-to-equity ratio stands at 4.7%, which means its debt level is low. ESTE has plenty of financial flexibility, without large debt obligations to meet in the short term, as well as the headroom to raise debt should it need to in the future. ESTE seems to have put its debt to good use, generating operating cash levels of 3.52x 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 Earthstone Energy, there are three pertinent factors you should look at:
- Historical Performance: What has ESTE’s returns been like over the past? Go into more detail in the past track record analysis and take a look at the free visual representations of our analysis for more clarity.
- Dividend Income vs Capital Gains: Does ESTE 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 ESTE as an investment.
- Other Attractive Alternatives : Are there other well-rounded stocks you could be holding instead of ESTE? Explore our interactive list of stocks with large potential to get an idea of what else is out there you may be missing!
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If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. 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.