Wall Street’s projections for Denbury Resources (DNR) point to a bleak few years ahead, likely driven by bearish expectations for crude oil prices.
Denbury seems to be undervalued compared to its peers, perhaps due to its weaker showing in line items and expected weak performance going forward.
Denbury’s debt has grown far faster than its earnings, measured by EBITDA. This means that EBITDA’s ability to cover interest payments has also weakened.
Looking at Denbury’s price ratios, it currently trades at a trailing 12-month PE of 4x. Similar peers trade at TTM PE multiples of ~5x, ~4.3, and ~4.9x.
Denbury’s enterprise value almost doubled over the last six years. Its market capitalization remained almost unchanged near ~$2.8 billion.
Putting Denbury’s cash flows together, we see that operating cash flows and well managed financing cash flows have kept pace with investing cash flows.
Denbury’s (DNR) cash flow from investing rose from just less than $1 billion in 2008 to $1.6 billion in 2011. Then it eased to almost $1.1 billion in 2014.
Denbury’s operating cash flows have been on an upward trend for the last few years. OCFs have grown from $775 million in 2008 to $1,223 million in 2014.
Denbury’s (DNR) balance sheet shows that assets have grown 3.5x, from $3.6 billion in 2008 to $12.7 billion at the end of 2014.
Denbury’s profit margins show a declining trend over the last six years. This is significant since revenues have been rising.
Over the last 12 quarters, Denbury’s operating costs have been drifting upward. They rose from $21.19 per BOE in 1Q12 to $22.64 per BOE in 4Q14.
Revenues for Denbury Resources Inc. (DNR) have almost doubled in the six years to 2014. They rose from ~$1.3 billion in 2008 to ~$2.4 billion in 2014.
Cliffs Natural Resources stock price has dropped ~35% year-to-date. Iron ore prices need to find a bottom before Cliffs can start rerating.
Cliffs North American coal segment owns two metallurgical coal operations in Alabama and West Virginia. The annual rated capacity is 6.5 million tons.
Cliffs Asia Pacific iron ore operations are located in Western Australia at the Koolyanobbing complex. The remaining mine life there is only five years.
Cliffs’ US iron ore segment produces various grades of iron ore pellets. Customers use the pellets in blast furnaces as part of their steelmaking process.
U.S. Steel’s closures could be potentially negative for Cliffs Natural Resources (CLF). US steelmakers are Cliffs’ major customers.
Most of Cliffs Natural Resources’ (CLF) revenues and earnings are tied to the US steel industry. Steel prices are a component of Cliffs’ pricing formula.
Cliffs was a guarantor on the Bloom Lake loan for equipment in Quebec. Cliffs’ stock slipped 7.5% after news broke that Cliffs has to pay the loan.
On February 26, 2015, Cliffs Natural Resources (CLF) announced exchange offers for four of its five series of senior unsecured notes outstanding as of 4Q14.