How does Continental Resources compare to its peers?


Nov. 20 2020, Updated 1:15 p.m. ET

Comparable company analysis

As you can see in the chart below, among Continental Resources, Inc.’s (CLR) peers, EOG Resources (EOG) and Whiting Petroleum (WLL) are the largest and the smallest companies by market capitalization and enterprise value (or EV), respectively.

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Concho Resources (CXO) has the highest EV to earnings before interest, taxes, depreciation, and amortization (or EBITDA) multiple (7.7x). Whiting Petroleum (WLL) has the lowest EV, approximately the summation of its equity value and net debt, when scaled by EBITDA in the group (EV/EBITDA of 4.1x).

Analysts’ consensus forward EV/EBITDA multiple is the lowest for Whiting Petroleum (WLL) in 2014, while Continental Resources’ (CLR) projected EV/EBITDA multiple of 5.3x is in line with the peer average. Forward EV/EBITDA is a useful metric to gauge relative valuation. A lower forward multiple compared to the present ratio typically indicates expectations of EBITDA growth for the period. Continental Resources is a component of the Energy Select Sector Standard & Poors depositary receipt (or SPDR) (XLE).

Debt levels

Continental Resources’ net debt-to-EBITDA multiple of 1.6x is one of the highest in the group, along with Concho Resources’ (CXO). A higher multiple could indicate a potential liquidity crunch, or insufficient cash to repay debt, particularly when crude oil prices are falling.

Continental Resources’ debt-to-equity multiple at ~1.2x is higher than its peers’. EOG Resources’ financial leverage at 0.4x is the lowest compared to its peers. Higher debt-to-equity ratio indicates increased risk associated with the management of debt levels.

Price-to-earnings ratio (or PE)

Continental Resources’ last 12-month (or LTM) PE multiple of 13.3x is marginally lower than the peer average. For the next four quarters, Continental Resources’ forward PE at 14.7x is below the peer average, reflecting market pessimism surrounding the stock. The higher number compared to the current multiple also reflects analysts’ expectations of lower profits this year.

Concho Resources’ (CXO) next four quarters forward PE is the highest at 26.0x. Forward PE considers the sell-side analysts’ consensus estimate of earnings for the year.

Continental Resources’ estimated earnings-per-share (or EPS) growth rate is at ~15%.

Check out our Energy and Power sector page for interesting articles on the industry that will show you what’s been happening in the sector.


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