PVAC is ~127% higher than its 52-week low
Penn Virginia (PVAC), a pure-play Eagle Ford Shale–focused exploration and production company, is trading 127% higher than its 52-week low, even after its 7.5% fall this month. PVAC’s gain could be due to its earnings being boosted by its production growth and improved operating margins. In the second quarter, PVAC’s adjusted EBITDAX[1.earnings before interest, tax, depreciation, depletion, amortization, and exploration expenses] rose 227.1% YoY (year-over-year) and 49.7% sequentially to $75.7 million.
What lies ahead?
Considering its strong earnings growth expectations and attractive valuation, PVAC’s recent dip could indicate a buying opportunity. This year, analysts expect PVAC’s CFFO (cash flow from operations) to rise 255% YoY to $289.9 million from $81.7 million, while the industry’s expected median growth is 60.5%. The company’s CFFO is expected to grow 59.7% and 40.6%, respectively, in 2019 and 2020. PVAC’s forward price-to-CFFO ratio was 3.7x on October 11, below the industry median of 5.1x.
All of the analysts covering Penn Virginia recommend “buy.” Their average target price of $103 for PVAC implies a ~40% upside to its current price of $88.