Sweet 16 Update - Sept 17
Posted: Sat Sep 17, 2022 9:26 am
During the week ending September 16, 2022 the Sweet 16 lost 6.54%, but it is still up 52.25% YTD and trading at a discount of 93.3% to my Fair Value Estimates, which have now all been updated. Q3 results won't be as good as Q2, but they are still going to be VERY GOOD. All 16 companies are generating free cash flow from operations. Our five gassers (AR, CRK, EQT, RRC and SBOW) should report better results in Q3.
This was a rough week for the stock market in general. The S&P 500 Index lost 4.07% and is now down 18.73% YTD.
I am updating all of the individual forecast/valuation models for the Sweet 16 companies this weekend. Half of them are updated already and you can find them on the EPG home page or under the Sweet 16 tab. It is best to download them to Excel, where you can change the forecast assumptions to see how it impacts net income, operating cash flow and stock valuation. They are all "macro driven" spreadsheets that update automatically when you make changes to anything in the forecast periods.
If you forgot your password or need help finding something on the website, send an email to Sabrina at energyprospectus@gmail.com and she will get it for you.
All of my stock valuations are based on a multiple of operating cash flow that I think is appropriate.
> All 16 companies are "free cash flow positive", which means they are funding all of their capital expenditures with operating cash flow.
> All of them have strong balance sheets and no near-term debt problems.
> All of them have paid off quite a bit of their debt this year.
> Ten of them pay dividends (CLR, EQT, EOG, MGY, MTDR, NOG, OVV, PDCE, RRC, SM).
> Several of them are aggressively buying back their stock. Stock buyback programs are noted on the forecast models.
> All of them have lots of "running room"; lots of valuable development drilling locations and active drilling programs.
> Based on Friday's closing prices, the Sweet 16 is trading at just 2.75 X 2022 operating cash flow per share.
>> LPI trades at 1.38 X CFPS and EOG trades at 5.43 X CFPS. < Size does matter in this business.
The Sweet 16 Summary spreadsheet will be posted to the EPG website later today, after I finish updating all of the forecast models.
Upstream companies with this much going for them should be trading at much higher multiples of CFPS. In a "normal market" (whatever that is), companies of this strength should be trading for 6X to 10X CFPS.
There won't be a podcast this weekend because I need to finish the newsletter (goal is to publish it Tuesday morning) and we have a live webinar on Thursday, September 22. You must register for the webinar if you want to be on the live event.
This was a rough week for the stock market in general. The S&P 500 Index lost 4.07% and is now down 18.73% YTD.
I am updating all of the individual forecast/valuation models for the Sweet 16 companies this weekend. Half of them are updated already and you can find them on the EPG home page or under the Sweet 16 tab. It is best to download them to Excel, where you can change the forecast assumptions to see how it impacts net income, operating cash flow and stock valuation. They are all "macro driven" spreadsheets that update automatically when you make changes to anything in the forecast periods.
If you forgot your password or need help finding something on the website, send an email to Sabrina at energyprospectus@gmail.com and she will get it for you.
All of my stock valuations are based on a multiple of operating cash flow that I think is appropriate.
> All 16 companies are "free cash flow positive", which means they are funding all of their capital expenditures with operating cash flow.
> All of them have strong balance sheets and no near-term debt problems.
> All of them have paid off quite a bit of their debt this year.
> Ten of them pay dividends (CLR, EQT, EOG, MGY, MTDR, NOG, OVV, PDCE, RRC, SM).
> Several of them are aggressively buying back their stock. Stock buyback programs are noted on the forecast models.
> All of them have lots of "running room"; lots of valuable development drilling locations and active drilling programs.
> Based on Friday's closing prices, the Sweet 16 is trading at just 2.75 X 2022 operating cash flow per share.
>> LPI trades at 1.38 X CFPS and EOG trades at 5.43 X CFPS. < Size does matter in this business.
The Sweet 16 Summary spreadsheet will be posted to the EPG website later today, after I finish updating all of the forecast models.
Upstream companies with this much going for them should be trading at much higher multiples of CFPS. In a "normal market" (whatever that is), companies of this strength should be trading for 6X to 10X CFPS.
There won't be a podcast this weekend because I need to finish the newsletter (goal is to publish it Tuesday morning) and we have a live webinar on Thursday, September 22. You must register for the webinar if you want to be on the live event.