May 18, 2023
Top 10 Stock Permian Resources Buy Recommendation
How to read the ranks
For every stock, we judge its performance against its peers and rank it on a scale of 1 to 100. The higher the rank, the better the stock performs than its peers. And, we do this for six investment strategies:
Value - shows how good of a value the stock is. Green is "inexpensive"; red is "expensive".
Growth - shows a company's growth potential. Green is "high growth" expected; red is "tough times ahead".
Safety - relates to the amount of debt a company has. Green is low debt level; red is high debt level.
Combined Financial - this isn't an average of the first three ranks but rather a consolidated view across several financial indicators. Green = good; red = tread carefully.
(NEW) Sentiment - quantifies professional analyst ratings and holdings as well as market pulse. Green = positive sentiment; red = skepticism (Only available to Premium Subscribers).
(NEW) 360° View - the ultimate rating with all financial and non-financial indicators.
Snapshot: Permian Resources – Top 10 Stock in Oil & Gas Mining and Production
Permian Resources is listed as a top 10 stock on May 18, 2023 in the market index Oil & Gas because of its high performance in at least one of the Obermatt investment strategies. While half the consolidated Obermatt Ranks are above-average, investor sentiment is below average and thus a signal for caution. Based on the Obermatt 360° View of 67 (high 67% performer), Obermatt assesses an overall buy recommendation for Permian Resources on May 18, 2023.
Snapshot: Obermatt Ranks
When Obermatt identifies the Top 10 stocks in a market, it’s based on a certain investment strategy. The best performing stocks usually aren’t the ones that everyone is talking about (those are often "over-priced" and have low Value ranks).
For each investment strategy, we provide you with more detailed analysis and our recommendation. You see the ranks of the top 10 stocks ranked by that particular investment strategy (360° View, Sentiment, Value, Growth, Safety and Combined Financial Performance).
360° View: Obermatt 360° Assessment Permian Resources Buy
| 360 METRICS | May 18, 2023 | |||||||
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| VALUE | ||||||||
| VALUE | 75 |
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| GROWTH | ||||||||
| GROWTH | 93 |
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| SAFETY | ||||||||
| SAFETY | 29 |
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| SENTIMENT | ||||||||
| SENTIMENT | 27 |
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| 360° VIEW | ||||||||
| 360° VIEW | 67 |
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ANALYSIS: With an Obermatt 360° View of 67 (better than 67% compared with alternatives), overall professional sentiment and engagement for the stock Permian Resources are above average. The 360° View is based on consolidating four consolidated indicators, with half of the metrics below and half above average for Permian Resources. The consolidated Value Rank has an attractive rank of 75, which means that the share price of Permian Resources is on the lower side compared with typical size in indicators such as revenues, profits, and invested capital. This means the stock price is lower than for 75% of alternative stocks in the same industry. The consolidated Growth Rank has a good rank of 93, which means that the company experiences above-average growth momentum when looking at financial metrics such as revenue, profit, and invested capital growth as well as stock returns. But the professional market sentiment is below average compared with other stock investment alternatives with a Sentiment Rank of 27. Professional investors are more confident in 73% other stocks. Worryingly, the company has risky financing, with a Safety rank of 29. This means 71% of comparable companies have a safer financing structure than Permian Resources. ...read more
RECOMMENDATION: With a 360° View of 67, Permian Resources is better than 67% of all alternative stock investment opportunities based on the Obermatt Method. Even though half of the consolidated Obermatt Ranks are above-average, namely the Value Rank at 75 and the Growth Rank above-average at 93, the picture is still mixed. The professional investor community is skeptical, with the Sentiment Rank below-average at 27. In addition, the company financing structure is on the riskier side (Safety Rank of 29). While everybody wants to buy at low stock prices (good value), there may be a good reason why Permian Resources's share price is low, namely because professionals are skeptical. One may be tempted by above-average growth, but that could also change quickly, as past performance is not a good indicator of future performance. Since the financing structure is on the risky side, investors should be careful with this decision and conduct further research if they are serious about investing in this company. ...read more
Sentiment Strategy: Professional Market Sentiment for Permian Resources only reserved
ANALYSIS: With an Obermatt Sentiment Rank of 27 (better than 27% compared with alternatives), overall professional sentiment and engagement for the stock Permian Resources is below industry average. The Sentiment Rank is based on consolidating four sentiment indicators, with three out of four metrics below average for Permian Resources. Analyst Opinions are at a rank of 83 (better than 83% of alternative investments), which means that, currently, stock research analysts tend to recommend a stock investment in the company. This is a good sign, were it not for Analyst Opinions Change with a low rank of 21, which means that currently, stock research experts are changing their opinions for the worse. In other words, they are getting more critical of a stock investment in Permian Resources. The Professional Investors rank is also low at 32, meaning that professional investors hold less stock in this company than in 68% of alternative investment opportunities. Pros tend to invest in other companies. Even worse, Market Pulse has a low rank of 18, which means that the current professional news and professional social networks are critical of this company (more negative news than for 82% of competitors). ...read more
RECOMMENDATION: With an Obermatt Sentiment Rank of 27 (less encouraging than 73% compared with investment alternatives), Permian Resources has a reputation among professional investors that is below that of its competitors. There are several negative sentiment signals, with only the Analyst Opinions Rank above average. This could be a stock with a long reputation for being positive but where things are worsening. Most analysts may not see it yet, but some have, and the professionals are already quite pessimistic. Proceed with caution when investing in this stock. ...read more
Value Strategy: Permian Resources Stock Price Value at the top
ANALYSIS: With an Obermatt Value Rank of 75 (better than 75% compared with alternatives) for 2023, Permian Resources shares are significantly less expensive than comparable stocks. The Value Rank is based on consolidating four value indicators, with half of the indicators below and half above average for Permian Resources. Price-to-Profit (also referred to as price-earnings, P/E) is 77 which means that the stock price compared with what market professionals expect for future profits is lower than for 77% of comparable companies, indicating a good value concerning Permian Resources's profit levels. The same is valid for Price-to-Book Capital (also referred to as market-to-book ratio) with the Price-to-Book Rank of 82, which means that the stock price is lower compared with invested capital than for 82% of comparable investments. On the other hand, Price-to-Sales is less favorable than for 52% of alternatives (only 48% of peers have an even less favorable ratio). The same is valid for dividend yield, which is lower than for 55% of comparable companies, making the stock more expensive compared with the company's expected dividend payouts. ...read more
RECOMMENDATION: The overall picture with a consolidated Value Rank of 75, is a strong buy recommendation based on Permian Resources's stock price compared with the company's operational size and dividend yields. This is a puzzling picture, because it means that profits are high while dividends are low. Since the stock price is low compared with invested capital but high concerning expected revenues, the company has more invested capital than peers for generating the same amount of revenue. Since profits are higher, it could be a "cash cow" situation (using the classic Boston Consulting Group or BCG matrix naming convention) where the company is on a downward trend, still living from the profits of past products. As the company pays low dividends, it may harbor the opinion that a turnaround is possible, and it rather invests the cash than distribute it to shareholders through dividends, thus sealing the company's fate early. This needs to be investigated, and the company's optimism verified before making a stock purchasing decision. ...read more
Growth Strategy: Permian Resources Growth Momentum high
ANALYSIS: With an Obermatt Growth Rank of 93 (better than 93% compared with alternatives) for 2023, Permian Resources shows one of the highest growth dynamics in its industry. Investors also speak of high momentum. The Growth Rank is based on consolidating four value indicators, with all but one indicator above average for Permian Resources. Sales Growth has a rank of 64 which means that currently, professionals expect the company to grow more than 64% of its competitors. Both Profit Growth, with a rank of 96, and Stock Returns, with a rank of 99, are also above average. But Capital Growth only has a rank of 39, which means that, currently, professionals expect the company to grow its invested capital less than 61% of its competitors. ...read more
RECOMMENDATION: The overall picture with a consolidated Growth Rank of 93, is a BUY recommendation for growth and momentum investors. That may be a good sign if the company is already well positioned and doesn't require more investments at this time. They may focus on growing the top (revenues) and bottom (profits) lines, recently rewarded with above-average stock returns for shareholders. But it may also be a sign of danger as the company is falling back with capital investment activities concerning competition. This requires further analysis of corporate communications. ...read more
Safety Strategy: Permian Resources Debt Financing Safety below-average
| SAFETY METRICS | May 18, 2023 | |||||||
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| LEVERAGE | ||||||||
| LEVERAGE | 48 |
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| REFINANCING | ||||||||
| REFINANCING | 29 |
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| LIQUIDITY | ||||||||
| LIQUIDITY | 23 |
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| CONSOLIDATED RANK: SAFETY | ||||||||
| CONSOLIDATED RANK: SAFETY | 29 |
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ANALYSIS: With an Obermatt Safety Rank of 29 (better than 29% compared with alternatives), the company Permian Resources has financing practices on the riskier side, which means that their overall debt burden is above the industry average. This doesn't mean that the business of Permian Resources is also risky, it only means that the company is on the riskier side in respect to bankruptcy in case things turn sour, assuming that public reporting is correct. The Safety Rank is based on consolidating three financing indicators, with all three metrics below average for Permian Resources. Liquidity is at 23, meaning that the company generates less profit to service its debt than 77% of its competitors. This indicates that the company is on the riskier side when it comes to debt service. Even worse, Leverage is at a rank of 48, meaning the company has an above-average debt-to-equity ratio. It has more debt than 52% of its competitors. Finally, Refinancing is at a rank of 29 which means that the portion of the debt about to be refinanced is above average. It has more debt in the refinancing stage than 71% of its competitors. ...read more
RECOMMENDATION: With an Obermatt Safety Rank of 29 (worse than 71% compared with alternatives), Permian Resources has a financing structure that is riskier than that of its competitors. This combination is rather dangerous in most situations. Only very promising companies with bright future outlooks and stellar reputations can operate with such risky financing. ...read more
Combined financial peformance: Permian Resources Top Financial Performance
| COMBINED PERFORMANCE | May 18, 2023 | |||||||
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| VALUE | ||||||||
| VALUE | 75 |
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| GROWTH | ||||||||
| GROWTH | 93 |
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| SAFETY | ||||||||
| SAFETY | 23 |
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| COMBINED | ||||||||
| COMBINED | 89 |
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ANALYSIS: With an Obermatt Combined Rank of 89 (better than 89% compared with investment alternatives), Permian Resources (Oil & Gas Production, USA) shares have much better financial characteristics than comparable stocks. Shares of Permian Resources are a good value (attractively priced) with a consolidated Obermatt Value Rank of 75 (better than 75% of alternatives), show above-average growth (Growth Rank of 93) but are riskily financed (Safety Rank of 29), which means above-average debt burdens. ...read more
RECOMMENDATION: An Obermatt Combined Rank of 89, is a strong buy recommendation based on Permian Resources's financial characteristics. As the company Permian Resources's key financial metrics exhibit excellent performance in two areas, such as good value (Obermatt Value Rank of 75) and above-average growth (Obermatt Growth Rank of 93), it could be argued that the risk-taking in financing (Obermatt Safety Rank of only 29) indicates that the company is optimistic about the future and sees debt as an opportunity to boost returns. More debt means more shareholder returns if everything goes well. However, higher debt burdens are risky when interest rates rise or the business deteriorates in a crisis. If you believe the company's future is market-typical or even better, this could be an argument for a share purchase. ...read more
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