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Cabot Oil & Gas’s Key Fundamentals: What Do the Numbers Say?

PART:
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Part 8
Cabot Oil & Gas’s Key Fundamentals: What Do the Numbers Say? PART 8 OF 9

Cabot Oil & Gas’s Relative Valuation: How It Compares to Peers

Relative valuation

In the previous part of this series, we compared Cabot Oil & Gas’s (COG) EV-to-EBITDA (enterprise value to earnings before interest, tax, depreciation, and amortization) multiple against its own historical valuation trends over the past two years. In this part, we’ll look at COG’s forward valuation against the multiples of its peers.Cabot Oil &amp; Gas’s Relative Valuation: How It Compares to Peers

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Forward EV-to-EBITDA multiple versus peers

Cabot’s forward EV-to-EBITDA multiple of ~10.0x is higher than its peers’ multiples. Noble Energy (NBL) is trading at a multiple of ~7.1x, and EQT (EQT) is trading at ~5.8x. Rice Energy (RICE) is trading at a multiple of ~6.8x, while Antero Resources (AR) is trading at ~8.0x. So COG appears to be overvalued compared to its peers. That suggests how the markets most likely expect the company to perform compared to its peers in the coming months.

Return on equity

In terms of returns, COG’s ROE (return on equity) stands at -6.4%. Among the company’s peers, Antero Resources has the highest ROE at 0.23%. Noble Energy has the lowest ROE at -19.3%. ROE measures returns on a shareholder’s equity, measured in percentage. A higher ratio suggests that a company is more efficient in turning shareholder investments into company profits.

Debt-to-assets ratios

COG’s debt-to-assets ratio is ~29.0%. Rice Energy has the lowest debt-to-assets ratio of ~20.0% among its peers. Debt-to-assets ratio is an indicator of a company’s leverage. A higher percentage indicates that a greater proportion of a company’s assets are being financed through debt. COG’s peer Chesapeake Energy (CHK) has a high debt-to-assets ratio of ~83.0%, implying a higher financial risk. To know more, read Chesapeake Energy’s Valuation: How It Compares to Its Peers.

To find out more about COG’s debt position, read Parts 1 and 2 of this series.

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