Comstock Resources (CRK) Update - Feb 21
Posted: Mon Feb 21, 2022 7:23 pm
We will be sending out an updated profile on Comstock in the morning.
I value companies based on operating cash flow and companies that are generating free cash flow from operations and continue to increase production should be trading for AT LEASE 4X operating cash flow per share.
Comstock generated FCF in 2020 and 2021.
Actual results
2020A: $490.2 million ($2.12/share) operating cash flow and year-over-year production growth of 49.1% thanks to Jerry Jones.
2021A: $908.2 million ($3.92/share) operating cash flow and year-over-year production growth of 8.2%, net of the Bakken sale to NOG that closed 11/16/2021.
2022E: $1,308.9 million ($5.61/share) operating cash flow and year-over-year production growth of 4.6%. FCF s/b ~$500 million.
IMO a valuation of 4X 2022 operating cash flow per share for CRK is a reasonable valuation.
CRK closed at $7.41 on Feb 18. That is less than 2X 2021 actual operating CFPS!
First Call's price target, based on much lower natural gas prices than we have today, is $12.56.
Mizuho Securities and Stifel Nicolaus price targets are $13.00 and $14.00.
I value companies based on operating cash flow and companies that are generating free cash flow from operations and continue to increase production should be trading for AT LEASE 4X operating cash flow per share.
Comstock generated FCF in 2020 and 2021.
Actual results
2020A: $490.2 million ($2.12/share) operating cash flow and year-over-year production growth of 49.1% thanks to Jerry Jones.
2021A: $908.2 million ($3.92/share) operating cash flow and year-over-year production growth of 8.2%, net of the Bakken sale to NOG that closed 11/16/2021.
2022E: $1,308.9 million ($5.61/share) operating cash flow and year-over-year production growth of 4.6%. FCF s/b ~$500 million.
IMO a valuation of 4X 2022 operating cash flow per share for CRK is a reasonable valuation.
CRK closed at $7.41 on Feb 18. That is less than 2X 2021 actual operating CFPS!
First Call's price target, based on much lower natural gas prices than we have today, is $12.56.
Mizuho Securities and Stifel Nicolaus price targets are $13.00 and $14.00.