What’s Whiting Petroleum’s Relative Valuation?
Whiting Petroleum’s relative valuation
Now that we have looked at Whiting Petroleum’s (WLL) EV-to-EBITDA (enterprise value to earnings before interest, tax, depreciation, and amortization) multiple compared to its historical values, we’ll look at the company’s valuation compared to its peers’ multiples.
Interested in CRZO? Don't miss the next report.
Receive e-mail alerts for new research on CRZO
Whiting Petroleum’s forward EV-to-EBITDA multiple of ~5.6x is mostly in line with its peer average of 5.9x. Its peer SM Energy (SM) is trading at a forward EV-to-EBITDA multiple of ~5.9x.
Return on equity
When its profitability is scaled by its shareholder equity, Whiting Petroleum offers negative returns. Its peers also offer negative returns. The calculation is the return on equity.
Whiting Petroleum’s return on equity stands at about -21%. The negative return on equity is due to the company’s negative net earnings or net loss. Among Whiting Petroleum’s peers, Carrizo Oil & Gas has the lowest return on equity at -52.5%.
As you can see in the above chart, Whiting Petroleum has a debt-to-assets ratio of ~35%. EP Energy’s debt-to-assets ratio is the highest among its peers. The debt-to-assets ratio is a way to measure a company’s leverage. A higher percentage indicates that a higher proportion of a company’s assets are financed through debt. So, the higher the ratio, the higher the financial risk.