Pioneer Natural Resources (PXD)
Posted: Tue Jan 17, 2017 1:38 pm
I have updated my forecast/valuation model for PXD and extended it through 2018 based on the guidance in their December presentation, which I believe may turn out to be too conservative.
I have increased my valuation by $19.00/share to $228.00. This compares to First Call's price target of $218.95.
My valuations are based on a rolling average of operating cash flow per share X a multiple that in my opinion is appropriate. The multiple I use for each company is a combination of financial strength, production growth and running room that they have in the leasehold they have. For example, for PXD my valuation is 16X 2016 to 2018 operating cash flow per share (the average for those three years). ON EACH FORECAST MODEL I NOW BUT A RED BOX THAT SHOWS FIRST CALL'S CFPS FORECASTS.
"IMO" is more than just a SWAG. Based on my decades of industry experience and financial modeling, my valuations are what I think a company would sell for in an arms length bidding process TODAY. First Call's price targets are a bit different, but good enough for comparison.
A multiple of 16X may seen a bit high to some of you, but the pure plays on the Permian are now trading for 15X to 25X CFPS.
PXD has 15% annual production growth locked in for many years.
Based on recent transactions in the Permian Basin (ie. FANG, NBL), PXD is a bargain at today's share price.
All of the forecasts on the EPG website are EXCEL spreadsheets that are macro driven. You can download them to Excel on your computer and change production and commodity prices and "like magic" the spreadsheet will change EPS, CFPS and the stock valuation. The forecast models are valuable tools, so learn how to use them.
I have increased my valuation by $19.00/share to $228.00. This compares to First Call's price target of $218.95.
My valuations are based on a rolling average of operating cash flow per share X a multiple that in my opinion is appropriate. The multiple I use for each company is a combination of financial strength, production growth and running room that they have in the leasehold they have. For example, for PXD my valuation is 16X 2016 to 2018 operating cash flow per share (the average for those three years). ON EACH FORECAST MODEL I NOW BUT A RED BOX THAT SHOWS FIRST CALL'S CFPS FORECASTS.
"IMO" is more than just a SWAG. Based on my decades of industry experience and financial modeling, my valuations are what I think a company would sell for in an arms length bidding process TODAY. First Call's price targets are a bit different, but good enough for comparison.
A multiple of 16X may seen a bit high to some of you, but the pure plays on the Permian are now trading for 15X to 25X CFPS.
PXD has 15% annual production growth locked in for many years.
Based on recent transactions in the Permian Basin (ie. FANG, NBL), PXD is a bargain at today's share price.
All of the forecasts on the EPG website are EXCEL spreadsheets that are macro driven. You can download them to Excel on your computer and change production and commodity prices and "like magic" the spreadsheet will change EPS, CFPS and the stock valuation. The forecast models are valuable tools, so learn how to use them.