What's Driving Earthstone Energy Inc's Surprising 41% Stock Rally?
Earthstone Energy Inc (NYSE:ESTE), an independent oil and natural gas development and production company, has seen a significant surge in its stock price over the past three months. The company's stock price has risen by 41.36% since July 2023, marking a notable increase from $20.21 to its current price. Over the past week, the stock has also seen a gain of 3.34%. The company's market cap now stands at $2.15 billion.
According to the GF Value, a measure defined by GuruFocus.com that calculates a stock's intrinsic value using historical multiples, past performance adjustments, and future business estimates, Earthstone Energy Inc is currently fairly valued. The GF Value stands at $20.85, slightly lower than the figure three months ago, which was $22.33. This indicates that the stock was significantly undervalued three months ago.
Company Overview
Earthstone Energy Inc operates in the Oil & Gas industry, focusing on the acquisition, development, exploration, and production of onshore, crude oil and natural gas reserves. The company is also active in corporate mergers and the acquisition of oil and natural gas properties. Its reserve portfolio consists of assets in the Midland Basin of West Texas, and the Eagle Ford Trend of South Texas. All of its operations are conducted onshore in the United States.
Profitability Analysis
Earthstone Energy Inc's Profitability Rank stands at 7 out of 10, indicating a strong profitability performance compared to its industry peers. The company's operating margin, calculated as Operating Income divided by its Revenue, is 45.11%, better than 87.37% of the companies in the same industry. This suggests that the company has been efficient in managing its operations and costs.
The company's ROE, ROA, and ROIC, which measure the company's profitability in relation to its equity, assets, and invested capital respectively, are also impressive. The ROE is 29.03%, the ROA is 11.96%, and the ROIC is 18.29%, each better than a significant majority of companies in the industry. Furthermore, the company has been profitable for 6 out of the past 10 years, better than 59.18% of the companies in the industry.
Growth Prospects
Earthstone Energy Inc's Growth Rank is 7 out of 10, indicating a strong growth performance. The company's 3-year and 5-year revenue growth rate per share are 39.30% and 23.90% respectively, each better than a significant majority of companies in the industry. The company's total revenue growth rate for the future 3 to 5 years is estimated to be 7.23%, better than 64.48% of the companies in the industry. The 3-year EPS without NRI growth rate is an impressive 522.70%, better than 99.71% of the companies in the industry. The EPS growth rate for the future 3 to 5 years is estimated to be 10.00%, better than 72.31% of the companies in the industry.
Major Stock Holders
The top three holders of Earthstone Energy Inc's stock are Chuck Royce (Trades, Portfolio), First Eagle Investment (Trades, Portfolio), and Paul Tudor Jones (Trades, Portfolio). Chuck Royce (Trades, Portfolio) holds 845,438 shares, accounting for 0.8% of the total shares. First Eagle Investment (Trades, Portfolio) holds 383,029 shares, accounting for 0.36% of the total shares. Paul Tudor Jones (Trades, Portfolio) holds 352,647 shares, accounting for 0.33% of the total shares.
Competitive Landscape
Earthstone Energy Inc operates in a competitive industry with several key players. Its main competitors include Talos Energy Inc (NYSE:TALO) with a stock market cap of $1.99 billion, Gulfport Energy Corp (NYSE:GPOR) with a stock market cap of $2.3 billion, and Sitio Royalties Corp (NYSE:STR) with a stock market cap of $1.93 billion.
Conclusion
In conclusion, Earthstone Energy Inc's stock performance, profitability, and growth prospects are impressive. The company's strong profitability and growth ranks, coupled with its fair valuation, make it an attractive investment option. However, the competitive landscape in the oil and gas industry and the volatility of oil prices are factors that investors should consider. Despite these challenges, the company's strong fundamentals and growth prospects suggest a positive outlook for the future.
This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
This article first appeared on GuruFocus.
