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Diamondback (FANG) Soars to 52-Week High, Time to Cash Out?
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Have you been paying attention to shares of Diamondback Energy (FANG - Free Report) ? Shares have been on the move with the stock up 38.1% over the past month. The stock hit a new 52-week high of $114.73 in the previous session. Diamondback Energy has gained 125.7% since the start of the year compared to the 39.1% move for the Zacks Oils-Energy sector and the 111.7% return for the Zacks Oil and Gas - Exploration and Production - United States industry.
What's Driving the Outperformance?
The stock has an impressive record of positive earnings surprises, as it hasn't missed our earnings consensus estimate in any of the last four quarters. In its last earnings report on August 2, 2021, Diamondback reported EPS of $2.4 versus consensus estimate of $2.25.
For the current fiscal year, Diamondback is expected to post earnings of $10.35 per share on $5.57 billion in revenues. This represents a 240.46% change in EPS on a 97.88% change in revenues. For the next fiscal year, the company is expected to earn $14.61 per share on $6.49 billion in revenues. This represents a year-over-year change of 41.17% and 16.58%, respectively.
Valuation Metrics
Diamondback may be at a 52-week high right now, but what might the future hold for the stock? A key aspect of this question is taking a look at valuation metrics in order to determine if the company is due for a pullback from this level.
On this front, we can look at the Zacks Style Scores, as they provide investors with an additional way to sort through stocks (beyond looking at the Zacks Rank of a security). These styles are represented by grades running from A to F in the categories of Value, Growth, and Momentum, while there is a combined VGM Score as well. Investors should consider the style scores a valuable tool that can help you to pick the most appropriate Zacks Rank stocks based on their individual investment style.
Diamondback has a Value Score of C. The stock's Growth and Momentum Scores are B and A, respectively, giving the company a VGM Score of B.
In terms of its value breakdown, the stock currently trades at 10.6X current fiscal year EPS estimates. On a trailing cash flow basis, the stock currently trades at 9.7X versus its peer group's average of 5.7X. Additionally, the stock has a PEG ratio of 0.48. This isn't enough to put the company in the top echelon of all stocks we cover from a value perspective.
Zacks Rank
We also need to consider the stock's Zacks Rank, as this supersedes any trend on the style score front. Fortunately, Diamondback currently has a Zacks Rank of #2 (Buy) thanks to favorable earnings estimate revisions from covering analysts.
Since we recommend that investors select stocks carrying Zacks Rank of 1 (Strong Buy) or 2 (Buy) and Style Scores of A or B, it looks as if Diamondback meets the list of requirements. Thus, it seems as though Diamondback shares could have a bit more room to run in the near term.
How Does Diamondback Stack Up to the Competition?
Shares of Diamondback have been moving higher, and the company still appears to be a decent choice, but what about the rest of the industry? Some of its industry peers are also looking good, including Devon Energy (DVN - Free Report) , PDC Energy , and Callon Petroleum , all of which currently have a Zacks Rank of at least #2 and a VGM Score of at least B, making them well-rounded choices.
The Zacks Industry Rank is in the top 6% of all the industries we have in our universe, so it looks like there are some nice tailwinds for Diamondback, even beyond its own solid fundamental situation.
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Diamondback (FANG) Soars to 52-Week High, Time to Cash Out?
Have you been paying attention to shares of Diamondback Energy (FANG - Free Report) ? Shares have been on the move with the stock up 38.1% over the past month. The stock hit a new 52-week high of $114.73 in the previous session. Diamondback Energy has gained 125.7% since the start of the year compared to the 39.1% move for the Zacks Oils-Energy sector and the 111.7% return for the Zacks Oil and Gas - Exploration and Production - United States industry.
What's Driving the Outperformance?
The stock has an impressive record of positive earnings surprises, as it hasn't missed our earnings consensus estimate in any of the last four quarters. In its last earnings report on August 2, 2021, Diamondback reported EPS of $2.4 versus consensus estimate of $2.25.
For the current fiscal year, Diamondback is expected to post earnings of $10.35 per share on $5.57 billion in revenues. This represents a 240.46% change in EPS on a 97.88% change in revenues. For the next fiscal year, the company is expected to earn $14.61 per share on $6.49 billion in revenues. This represents a year-over-year change of 41.17% and 16.58%, respectively.
Valuation Metrics
Diamondback may be at a 52-week high right now, but what might the future hold for the stock? A key aspect of this question is taking a look at valuation metrics in order to determine if the company is due for a pullback from this level.
On this front, we can look at the Zacks Style Scores, as they provide investors with an additional way to sort through stocks (beyond looking at the Zacks Rank of a security). These styles are represented by grades running from A to F in the categories of Value, Growth, and Momentum, while there is a combined VGM Score as well. Investors should consider the style scores a valuable tool that can help you to pick the most appropriate Zacks Rank stocks based on their individual investment style.
Diamondback has a Value Score of C. The stock's Growth and Momentum Scores are B and A, respectively, giving the company a VGM Score of B.
In terms of its value breakdown, the stock currently trades at 10.6X current fiscal year EPS estimates. On a trailing cash flow basis, the stock currently trades at 9.7X versus its peer group's average of 5.7X. Additionally, the stock has a PEG ratio of 0.48. This isn't enough to put the company in the top echelon of all stocks we cover from a value perspective.
Zacks Rank
We also need to consider the stock's Zacks Rank, as this supersedes any trend on the style score front. Fortunately, Diamondback currently has a Zacks Rank of #2 (Buy) thanks to favorable earnings estimate revisions from covering analysts.
Since we recommend that investors select stocks carrying Zacks Rank of 1 (Strong Buy) or 2 (Buy) and Style Scores of A or B, it looks as if Diamondback meets the list of requirements. Thus, it seems as though Diamondback shares could have a bit more room to run in the near term.
How Does Diamondback Stack Up to the Competition?
Shares of Diamondback have been moving higher, and the company still appears to be a decent choice, but what about the rest of the industry? Some of its industry peers are also looking good, including Devon Energy (DVN - Free Report) , PDC Energy , and Callon Petroleum , all of which currently have a Zacks Rank of at least #2 and a VGM Score of at least B, making them well-rounded choices.
The Zacks Industry Rank is in the top 6% of all the industries we have in our universe, so it looks like there are some nice tailwinds for Diamondback, even beyond its own solid fundamental situation.