Are Diamondback Energy Inc (FANG) shares trading below fair value?
InvestorsObserver gives Diamondback Energy Inc (FANG) a low valuation rating of 14 based on its analysis. The proprietary rating system considers the underlying health of a company by analyzing its stock price, earnings and growth rate. FANG currently holds a better value than 14% of the stock based on these metrics. Long-term buy-and-hold investors should find the valuation ranking system most relevant when making investment decisions.
FANG has a year-over-year price-to-earnings (PE) ratio of 8.9. The historical average of around 15 indicates good value for FANG stock as investors pay lower prices relative to company earnings. FANG’s low trailing PE ratio shows that the company has been trading below fair market value recently. Its trailing 12-month earnings per share (EPS) of 15.25 more than justifies the current share price. However, rolling PE ratios do not take into account the company’s projected growth rate, resulting in many new companies having high PE ratios due to high growth potential that attracts investors despite insufficient earnings. . FANG has a 12-month PE-to-Growth (PEG) ratio of 0.24. Markets are overvaluing FANG relative to its expected growth, as its PEG ratio is currently above the fair market value of 1. The PEG of 15.25 stems from its forward price-to-earnings ratio being divided by its growth rate . PEG ratios are one of the most widely used valuation metrics due to the incorporation of more fundamental business metrics and the focus on the future of the business rather than about his past.
FANG’s valuation metrics are strong at its current price due to an undervalued PEG ratio despite strong growth. FANG’s PE and PEG are better than the market average, which translates into an above-average valuation score. Click here for the full Diamondback Energy Inc (FANG) stock report.
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