Vital Energy (VTLE) Valuation Update - April 20

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dan_s
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Joined: Fri Apr 23, 2010 8:22 am

Vital Energy (VTLE) Valuation Update - April 20

Post by dan_s »

On April 10th Vital put out a press release with preliminary information with Q1 actual production and increased guidance for 2023.

Since that date, four energy analysts have submitted updated price targets to TipRanks.
Piper Sandler 4/19/2023 $57.00
Stifel Nicolaus 4/13/2023 $108.00 < Agrees with my valuation.
Mizuho Sec 4/10/2023 $53.00
Wiebert W S 4/10/2023 $76.00

At the time of this post VTLE was trading at $46.84.

In 2022 Vital Energy (formerly known as Laredo Petroleum) was the most profitable company in the Sweet 16 on a per share basis.
They reported Net Income per share of $37.67 and operating cash flow per share of $47.75.

Here are TipRanks' consensus forecasts for 2023 and 2024.
2023: Earnings per share of $21.71 and operating cash flow per share of $43.39
2024: Earnings per share of $20.83 and operating cash flow per share of $41.53

My forecasts for 2023 are actually lower ($17.15 EPS & $38.96 CFPS), but I still come up with a reasonable current valuation of $108 for this stock.

Vital's Q1 production came in way over their guidance and with the Driftwood Acquisition closing on April 3rd (adding over 5,000 Boepd / 63% oil) the Company's production guidance for Q2 seems extremely conservative to me. I believe that their new CEO is playing the game of "under-promise and then over-deliver" on production guidance since Laredo had a history of over-promising. For whatever reason, most of the Wall Street Gang continues to value this stock at extremely low multiples of operating cash flow. If Vital keeps beating their production guidance that will change.

BTW Vital has more than 50% of their 2023 natural gas hedged at $4.14/mcf.
Dan Steffens
Energy Prospectus Group
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