DALXF - Peyto: Strong FCF Generation But Not Enough Runway To Outpace Inflation
- Peyto is currently enjoying the high-gas pricing backdrop, but that is underpinned by multiple operational risks.
- Peyto is an experienced operator but subject to high decline rates and modest reserves.
- Peyto’s accelerated capital program and rising inflation costs will likely wear into its profit margins.
- At current prices, Peyto’s implied valuation of C$14 – C$15 per share yields only a modest 7% upside.
- Peyto’s valuation multiples may compress quickly if prices were to decrease, and costs continue to increase.
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Peyto: Strong FCF Generation, But Not Enough Runway To Outpace Inflation