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Cabot Oil & Gas’s Valuation Trends and Forecasts

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Cabot’s historical valuation

Cabot Oil & Gas’s (COG) EV[1.enterprise value]-to-adjusted EBITDA ratio was ~11.57x in the first quarter. EV is the sum of a company’s market capitalization and net debt.

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Breaking down COG’s valuation

As shown in the graph above, Cabot’s first-quarter 2018 EV-to-EBITDA multiple is lower than its average of ~20.21x between Q1 2016 and Q1 2018. In Q1 2018, the market value of its equity fell ~4.5% YoY (year-over-year) to ~$557.30 million from ~$983.39 million, while its EV fell 5.76% YoY.

COG’s trailing-12-month EBITDA rose 43% in Q1 2018, which explains why its EV-to-EBITDA multiple fell YoY. Its forward EV-to-EBITDA multiple—which is based on market expectations for its EBITDA for the current fiscal year—is ~8.00x. 

Peer comparison

In comparison, Noble Energy (NBL), Antero Resources (AR), Chesapeake Energy (CHK), and Range Resources (RRC) have forward EV-to-EBITDA multiples of ~6.98x, ~5.33x, ~6.44x, and ~6.55x, respectively.

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