Replies to post #11470 on The Rising Influence of Rising Affluence

[mr_o]

The ratio variations can be somewhat explained by the different maturity and balance sheet strength of each company.

For example, FANG & PE clearly have high ratios. This can be interpreted by saying the companies have high quality leases but do not have the financial clout to turn their undeveloped properties into cashflow. Thus in my opinion these companies are close to fully valued (compared to peers) without taking into consideration buyout potential.

OXY & PXD are larger companies, though still maintain a higher EV/EBITA ratio than average due to their strong balance sheet and premier leasing positions. Stable companies, clearly. Undervalued, not quite sure.

DVN & ECA currently have lower EV/EBITA ratios while having high quality leases in the Delaware and Wolfcamp respectively, implying more value per share compared to peers. Both are more leveraged, particularly DVN, but maintain decent balance sheets.


At least this is how I interpret the data.