PXD - Diamondback Energy: Strong Balance Sheet High Yield Low Valuation

Summary

• Diamondback Energy is one of the largest E&Ps in the Permian Basin and boasts an incredibly wealthy resource base.
• The company's reserves are sufficient to allow it to be patient and acquire acreage at good prices.
• The company is not particularly interested in growing its production right now, focusing instead on rewarding its shareholders.
• The company is paying out 75% of its FCF to investors, which allows it to have a 6.60% annualized yield.
• The stock is substantially undervalued right now but may remain so for a while. The high yield will reward patience, however.

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