FANG - Diamondback Energy: More Room To Run

2024-05-15 05:39:20 ET

Summary

• Diamondback Energy's stock has been performing well, remaining near its high and almost doubling its 52-week low.
• The recent announcement of the potential acquisition of Endeavor has caused a stock price run-up that has some worried about overvaluation.
• Despite the acquisition uncertainty, Diamondback Energy's stock is still considered fairly cheap. The price-to-earnings ratio is a mere 10 (roughly).
• The company has grown cash flow per share over time despite the volatility of commodity prices.
• Stock repurchases magnify the effect of accretive acquisitions, which enhances the long-term growth track record. The base dividend is growing rapidly.

The common stock of Diamondback Energy ( FANG ) has had a good run lately.

The stock remains near its high, which is getting near to doubling its 52-week low. Much of this can be attributed to the recent announcement of the acquisition of Endeavor. There is some apprehension about the potential success of Endeavor. But that takes away from the main idea that this is still a fairly cheap stock even without the acquisition. The price-to-earnings ratio shown above is dirt cheap for a company with the growth record of Diamondback....

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