Magnolia Oil & Gas (MGY) a TipRanks Strong Buy

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Magnolia Oil & Gas (MGY) a TipRanks Strong Buy

Post by dan_s »

Note below from TipRanks dated 3-2-2023

Magnolia Oil & Gas (MGY)

Next up is Magnolia Oil & Gas, a pure-play oil and gas E&P (exploration and production) company. Most of MGY’s operations are concentrated in South Texas’s Eagle Ford Shale and Austin Chalk formations. Its holdings consist of a combined 460,000 net acres in the Giddings area and Karnes County, the former of which the business views as a resurgent oil play with ‘extensive inventory potential’ and significant room for growth.

Growth was on the menu for the profitability profile when the company reported Q4 earnings last month. The company dialed in net income of $254.8 million in the quarter, up from $192.1 million in the same period a year ago. That translated to EPS of $1.20, some distance above the $0.78 anticipated by the analysts. Total production in the quarter increased by 6% year-over-year to 73.8 thousand barrels of oil equivalent per day.

During Q4, the company also repurchased 2.4 million shares for $57.8 million, not far off Q3’s $61 million, and the company has 8.9 million shares left on the repurchase authorization program.

MGY has also shown a consistent commitment to paying out its dividend, and in late January, the company raised the payment by 15% to $0.115. This brought the annualized value of the dividend to $0.46 per share, and makes the yield 2.08%.

For Truist analyst Neil Dingmann, it all adds up to a company that delivers the goods to its shareholders. < Neal's Price Target is $29.00

“We continue to favor MGY’s relatively methodical shareholder return plan that includes dividends that will not exceed 50% of the prior year’s reported Net Income and opportunistic share repurchases of at least 1% of total shares each quarter,” the 5-star analyst wrote. “The flexible shareholder return program ensures the company maintains its pristine balance sheet while having ample dry powder to materially participate if the large equity sponsor decides to sell some, or all of its remaining 13% total shares. MGY’s operational plan remains stable with two rigs continuing with one focused on their highest return development activity, and the other is focused on both developmental and delineation activity.”

Based on the above, Dingmann rates MGY shares a Buy along with a $29 price target. The implication for investors? Upside of ~27% from current levels. (To watch Dingmann’s track record, click here)

Elsewhere on the Street, with 5 additional Buys outgunning Hold, the stock claims a Strong Buy consensus rating. The forecast calls for 12-month returns of ~31%, considering the average target currently stands at $29.86.
Dan Steffens
Energy Prospectus Group
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