Magnolia Oil & Gas (MGY) Valuation Update - May 10
Posted: Tue May 10, 2022 9:32 am
MGY was trading at $23.30 at the time of this post. I have updated my forecast/valuation model for MGY's solid Q1 results and updated guidance.
My valuation increases by $2 to $34 per share.
Why?
> None of the Company's production is hedged.
> Strong balance sheet with no near-term debt issues.
> Steady production growth with ~12% YOY growth in 2022; approaching 78,000 Boepd by year-end.
> 2022 operating cash flow forecast of $1,220 million - capex budget of $400 million = free cash flow of $820 million
> Stock repurchase program expected to reduce outstanding common stock by 1% per quarter.
> Dividend increases likely
> My valuation is 7X annualized operating cash flow per share.
TipRanks: "On 5/10/2022 Gabriele Sorbara at Siebert Williams Shank & Co increases his price target to $37.00"
My valuation increases by $2 to $34 per share.
Why?
> None of the Company's production is hedged.
> Strong balance sheet with no near-term debt issues.
> Steady production growth with ~12% YOY growth in 2022; approaching 78,000 Boepd by year-end.
> 2022 operating cash flow forecast of $1,220 million - capex budget of $400 million = free cash flow of $820 million
> Stock repurchase program expected to reduce outstanding common stock by 1% per quarter.
> Dividend increases likely
> My valuation is 7X annualized operating cash flow per share.
TipRanks: "On 5/10/2022 Gabriele Sorbara at Siebert Williams Shank & Co increases his price target to $37.00"