May 18, 2023
Top 10 Stock Diamondback Energy 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: Diamondback Energy – Top 10 Stock in Oil & Gas Mining and Production
Diamondback Energy 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. Three consolidated Obermatt Ranks are above-average. Only the Value Rank is below average. The investment rationale may be an investment in future growth, supported by professional market opinion. Based on the Obermatt 360° View of 63 (high 63% performer), Obermatt assesses an overall buy recommendation for Diamondback Energy 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 Diamondback Energy Buy
| 360 METRICS | May 18, 2023 | |||||||
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| VALUE | ||||||||
| VALUE | 31 |
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| GROWTH | ||||||||
| GROWTH | 63 |
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| SAFETY | ||||||||
| SAFETY | 67 |
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| SENTIMENT | ||||||||
| SENTIMENT | 57 |
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| 360° VIEW | ||||||||
| 360° VIEW | 63 |
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ANALYSIS: With an Obermatt 360° View of 63 (better than 63% compared with alternatives), overall professional sentiment and engagement for the stock Diamondback Energy are above average. The 360° View is based on consolidating four consolidated indicators, with all but one indicator above average for Diamondback Energy. The consolidated Growth Rank has a good rank of 63, 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. This means that growth is higher than for 63% of competitors in the same industry. The consolidated Safety Rank at 67 means that the company has a financing structure that is safer than 67 comparable companies when looking at the amount of its debt, its refinancing requirements, and its ability to service debt. Finally, the consolidated Sentiment Rank has a good rank of 57, which means that professional investors are more optimistic about the stock than for 57% of alternative investment opportunities. But the consolidated Value Rank is less desirable at 31, meaning that the share price of Diamondback Energy is on the higher side compared with indicators such as revenues, profits, and invested capital. This means the stock price is higher than for 69% of alternative stocks in the same industry. ...read more
RECOMMENDATION: With a 360° View of 63, Diamondback Energy is better than 63% of all alternative stock investment opportunities based on the Obermatt Method. As three out of four consolidated Obermatt Ranks exhibit excellent performance, such as above-average growth (Growth Rank of 63), a safe financing structure (Safety Rank of 67), and positive professional market sentiment (Sentiment Rank of 57), it is a solid stock investment where growth may be the strongest driver of the investment rationale, also reflected by institutional investors. It is typical for growth companies to have low value, as is the case here. Investors are willing to pay more for companies that outperform their competitors. So the question is, how much more do you pay for the stock of Diamondback Energy compared with alternatives? You can use the following rule of dumb: The growth rank reflects where the growth momentum of the company is (63% better than peers). The value rank could be the reverse reflection of that (37%). A Value Rank below that level may be assessed as expensive, a rank above that is still good value. Sometimes market sentiment just extrapolates the past, but sometimes they are right. You pay more than the market average for this stock, but it may be worth it. ...read more
Sentiment Strategy: Professional Market Sentiment for Diamondback Energy positive
ANALYSIS: With an Obermatt Sentiment Rank of 57 (better than 57% compared with alternatives), overall professional sentiment and engagement for the stock Diamondback Energy is above average. The Sentiment Rank is based on consolidating four sentiment indicators where all but one are above average for Diamondback Energy. Analyst Opinions are at a rank of 84 (better than 84% of alternative investments), which means that currently, stock research analysts tend to recommend a stock investment in the company. The Professional Investors rank is also good at 55, which means that currently, professional investors hold more stock in this company than in 55% of alternative investment opportunities. Pros tend to favor investing in this company. In addition, Market Pulse has a rank of 70 which means that the current professional news and professional social networks are on the positive side when discussing this company (more positive news than for 70% of competitors). But Analyst Opinions Change has a below-average rank of 12, which means that stock research experts are currently changing their opinions for the worse when it comes to recommending this stock. In other words, they are getting more critical of investments in Diamondback Energy. ...read more
RECOMMENDATION: With an Obermatt Sentiment Rank of 57 (more positive than 57% compared with investment alternatives), Diamondback Energy has a reputation among professional investors that is above-average compared with that of its competitors. This is an early sign of caution, even if the stock has significantly appreciated. If analysts change their opinions, the stock may become too expensive. If the price is on the way down, the trend may continue. This may be a stock with a good reputation and history, but it may have reached its breaking point by now. Investors should look at the Value Ranks as well. If they indicate trouble, it might just materialize in the future. ...read more
Value Strategy: Diamondback Energy Stock Price Value below-average critical
ANALYSIS: With an Obermatt Value Rank of 31 (worse than 69% compared with alternatives), Diamondback Energy shares are more expensive than the average comparable stock. The Value Rank is based on consolidating four value indicators, with half of the indicators below and half above average for Diamondback Energy. Price-to-Profit (also referred to as price-earnings, P/E) is 55 which means that the stock price compared with what market professionals expect for future profits is lower than for 55% of comparable companies, indicating a good value concerning Diamondback Energy's profit levels. The same is valid for Price-to-Book Capital (also referred to as market-to-book ratio) with an Price-to-Book Rank of 45, which means that the stock price is lower compared with invested capital than for 45% of comparable investments. On the other hand, Price-to-Sales is less favorable than 88% of alternatives (only 12% of peers have an even less favorable ratio). The same is valid for dividend yield, which is lower than 47% 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 31, is a HOLD recommendation based on Diamondback Energy'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 in respect to expected revenues, it means that 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 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 pay it out to shareholders, thus sealing the company's fate early. This needs to be investigated, and the company's optimism verified before deciding to buy the stock. ...read more
Growth Strategy: Diamondback Energy Growth Momentum good
ANALYSIS: With an Obermatt Growth Rank of 63 (better than 63% compared with alternatives), Diamondback Energy shows an above-average growth dynamic in its industry. Investors also speak of positive momentum. The Growth Rank is based on consolidating four value indicators, with half of the indicators below and half above average for Diamondback Energy. Profit Growth has a rank of 71, which means that currently professionals expect the company to grow its profits more than 71% of its competitors. This is a good sign for shareholders, which is confirmed by an above-average Stock Returns rank of 85 (above 85% of alternative investments). But Sales Growth has a below the median rank of 28, which means that, currently, professionals expect the company to grow less than 72% of its competitors, and Capital Growth also has a lower rank of 28. ...read more
RECOMMENDATION: The overall picture with a consolidated Value Rank of 63, is a BUY recommendation for growth and momentum investors. Because revenues and invested capital are the more solid growth indicators, the positive development on the profit side is less relevant. It may have been caused by cost-cutting, which may be a negative growth indicator. Finally, the above-average stock returns recently are a thing of the past and not a good indicator of future returns. Investors should be confident that the cost-cutting initiative leading to higher profits is to benefit the company's future. If not, there is little growth momentum, and investment is only advisable if the Value Ranks suggest a good investment timing for Diamondback Energy. ...read more
Safety Strategy: Diamondback Energy Debt Financing Safety above-average
| SAFETY METRICS | May 18, 2023 | |||||||
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| LEVERAGE | ||||||||
| LEVERAGE | 48 |
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| REFINANCING | ||||||||
| REFINANCING | 41 |
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| LIQUIDITY | ||||||||
| LIQUIDITY | 81 |
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| CONSOLIDATED RANK: SAFETY | ||||||||
| CONSOLIDATED RANK: SAFETY | 67 |
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ANALYSIS: With an Obermatt Safety Rank of 67 (better than 67% compared with alternatives), the company Diamondback Energy has financing practices on the safer side, which mean that their overall debt burden is lower than average. This doesn't mean that the business of Diamondback Energy is safe, it only means that the company is on the safer side regarding possible bankruptcy, assuming that public reporting is correct. The Safety Rank is based on consolidating three financing indicators, with just one indicator above average for Diamondback Energy. Liquidity is at 81, meaning the company generates more profit to service its debt than 81% of its competitors. This indicates that the company is safer when it comes to debt service. But Refinancing is riskier at a rank of 41, which means that the portion of the debt that is about to be refinanced is above average. It has more debt in the refinancing stage than 59% of its competitors. Leverage is also high at a rank of 48, which means that the company has an above-average debt-to-equity ratio. It has more debt than 52% of its competitors. ...read more
RECOMMENDATION: With an Obermatt Safety Rank of 67 (better than 67% compared with alternatives), Diamondback Energy has a financing structure that is safer than that of its competitors. High Leverage (a low Obermatt Leverage Rank) is good in good times, because it usuallyl indicates that shareholders get higher returns. The good Liquidity performance of the company is an indicator that this is the case. However, if you expect an economic downturn, you may stay clear of this stock because they have an above-average debt level that needs refinancing soon. ...read more
Combined financial peformance: Diamondback Energy Above-Average Financial Performance
| COMBINED PERFORMANCE | May 18, 2023 | |||||||
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| VALUE | ||||||||
| VALUE | 31 |
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| GROWTH | ||||||||
| GROWTH | 63 |
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| SAFETY | ||||||||
| SAFETY | 81 |
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| COMBINED | ||||||||
| COMBINED | 57 |
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ANALYSIS: With an Obermatt Combined Rank of 57 (better than 57% compared with investment alternatives), Diamondback Energy (Oil & Gas Production, USA) shares have above-average financial characteristics compared with similar stocks. Shares of Diamondback Energy are low in value (priced high) with a consolidated Obermatt Value Rank of 31 (worse than 69% of alternatives). But they show above-average growth (Growth Rank of 63) and are safely financed (Safety Rank of 67, which means below-average debt burdens). ...read more
RECOMMENDATION: An Obermatt Combined Rank of 57, is a buy recommendation based on Diamondback Energy's financial characteristics. Investors looking for growth and low financial risk may find this stock attractive. While the company Diamondback Energy exhibits low value (Obermatt Value Rank of 31), which means that the stock price is rather high, it also demonstrates above-average growth (Obermatt Growth Rank of 63). This is a typical case, as high-growth companies are often expensive. Good financing practices (Obermatt Safety Rank of 67) are a double-edged sword: if the company continues growing, low debt limits shareholder returns. But if the company increases its debt, it will also increase risk. In other words, this is an investment on the safer side, despite the above-average price (low value). ...read more
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