Par Pacific Holdings Inc (PARR, Financial) recently experienced a daily loss of 1.46%, although it has seen a 3-month gain of 2.42%. With an Earnings Per Share (EPS) of 8.58, investors are contemplating whether the stock is modestly overvalued. This article delves into a valuation analysis to determine the true worth of Par Pacific Holdings, guiding investors through the complexities of stock valuation.
Company Introduction
Par Pacific Holdings Inc is a prominent player in the oil and gas sector, managing a diversified portfolio of energy and infrastructure businesses. The company is organized into three main segments: Refining, Retail, and Logistics, with the Refining segment being the most significant revenue generator. The current stock price of $35.17 stands above the GF Value of $30.99, indicating a potential overvaluation. This juxtaposition sets the stage for an in-depth valuation analysis.
Summarize GF Value
The GF Value is a unique metric that estimates the intrinsic value of a stock by considering historical trading multiples, an adjustment factor for past returns and growth, and future business performance projections. Par Pacific Holdings (PARR, Financial) has a market cap of $2.10 billion and, with a current price of $35.17 per share, appears modestly overvalued relative to the GF Value. This suggests that the long-term return on the stock may not align with the company's business growth.
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Financial Strength Analysis
Investors must evaluate the financial strength of a company to avoid potential capital loss. Par Pacific Holdings' cash-to-debt ratio of 0.2 places it below 68.31% of its industry peers. The company's financial strength is rated as fair, with a GuruFocus ranking of 6 out of 10.
Profitability and Growth Prospects
Par Pacific Holdings has been profitable for 4 out of the past 10 years, with recent annual revenues of $7.90 billion and an Earnings Per Share (EPS) of $8.58. Despite an operating margin that is below average for its industry, the company's profitability is considered fair. Furthermore, Par Pacific Holdings' growth is a vital factor for valuation, with a 3-year average annual revenue growth rate of 4.5% and an EBITDA growth rate of 50.4%, indicating a strong potential for future value creation.
ROIC vs. WACC
Comparing Return on Invested Capital (ROIC) with the Weighted Average Cost of Capital (WACC) is crucial for assessing profitability. Par Pacific Holdings boasts an ROIC of 21.43, which significantly exceeds its WACC of 8.96, suggesting efficient capital utilization.
Conclusion
Overall, Par Pacific Holdings (PARR, Financial) is estimated to be modestly overvalued. The company maintains a fair financial condition and profitability, with growth that outperforms a significant portion of its industry. For a comprehensive understanding of Par Pacific Holdings' financial health, interested parties can explore its 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.
