Amidst a daily change of -8.54% and a 3-month decline of -16.12%, investors are keen to understand the true value of Texas Pacific Land Corp (TPL, Financial). With an Earnings Per Share (EPS) of 50.97, questions arise around its current market valuation. Is Texas Pacific Land modestly undervalued as suggested by its GF Value? This analysis aims to provide a detailed valuation perspective, encouraging readers to delve into the intricate financial landscape of TPL.
Company Introduction
Texas Pacific Land Corp operates with a focused eye on land sales and leases, retaining oil and gas royalties, and the astute management of its land assets. With operations sprawling across 19 counties, TPL's business segments include Land and Resource Management as well as Water Service and Operations. The current stock price of $1597.16 per share stands against the GF Value of $1902.83, suggesting a potential undervaluation. This juxtaposition sets the stage for an in-depth analysis of Texas Pacific Land's intrinsic value.
Summarize GF Value
The GF Value is a yardstick for assessing the intrinsic value of a stock, incorporating historical trading multiples, a GuruFocus adjustment factor, and projected business performance. The GF Value Line serves as a benchmark for the ideal fair trading value of a stock. Texas Pacific Land's current price, paired with a market cap of $12.30 billion, suggests that the stock may be modestly undervalued. This assessment indicates that the long-term return of TPL's stock could surpass its business growth.
Financial Strength
Assessing a company's financial strength is crucial to sidestep the risk of permanent capital loss. Texas Pacific Land's robust cash-to-debt ratio of 334.61 outshines 87.44% of its peers in the Oil & Gas industry. With a financial strength rating of 9 out of 10, TPL's fiscal health is evidently strong.
Profitability and Growth
Consistent profitability lessens investment risk. Texas Pacific Land's impressive operating margin of 77.14% exceeds that of 97.86% of competitors in its sector, reflecting a profitability rank of 10 out of 10. However, the company's growth metrics present a mixed picture, with revenue growth outpacing only half of the industry players, and EBITDA growth lagging slightly behind the median.
ROIC vs WACC
Comparing Return on Invested Capital (ROIC) to the Weighted Average Cost of Capital (WACC) is a measure of value creation. Texas Pacific Land's ROIC of 108.37 starkly overshadows its WACC of 12.37, signaling a strong value generation for shareholders.
Conclusion
Conclusively, Texas Pacific Land (TPL, Financial) appears modestly undervalued, bolstered by formidable financial health and profitability. Despite mixed growth rankings, its value generation is evident, making TPL a stock worth considering. For a deeper financial dive, explore TPL's 30-Year Financials here.
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This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
