Diamondback Energy (NASDAQ: FANG)
may be setting up for a fresh round of gains after resetting its base count in August. It cleared a first-stage, cup-shaped base on October 5, and has been trending higher since then.
The base-count reset came on August 20, as the stock pulled back to a session low of $68.18, slashing through the previous structure low of $69.53.
This kind of reset often means new investors see an opening to scoop up shares at a lower price, which can result in a fresh run-up.
That's indeed what's been happening to Diamondback, so far. Since clearing the cup buy point above $102.53, shares are up more than 8%, trading at their best levels since late 2018.
In the past month, Diamondback advanced 32.24%.
Even with the recent base-count reset, the stock has notched some impressive recent returns:
3 months: 40.01%
One year: 278.58%
Analysts' consensus rating on the stock is a "buy," with a price target of $104.09, representing a 6.30% downside, according to MarketBeat's analyst ratings data.
This month alone, five analysts boosted their price targets on the stock, ahead of the company's third-quarter earnings report on November 1.
Analysts expect Diamondback to earn $2.70 per share on revenue of $1.47 billion. Both would be significant gains over the year-earlier quarter.
According to MarketBeat earnings data, Diamondback beat Wall Street earnings views in the past seven quarters. It missed revenue views in some of those quarters, but the three-year revenue growth rate stands at an impressive 32.55%.
Well-Positioned For Global Competition
Some analysts believe that domestic shale companies such as Diamondback, along with others, including Continental Resources and EOG Resources, may be well-positioned to successfully compete with overseas drillers.
Midland, Texas-based Diamondback, which went public in 2012, has long focused on being a low-cost producer, which has helped the balance sheet and helps drive earnings growth.
Diamondback's subsidiary Viper Energy Partners owns mineral rights on some of the company's high-potential sites, which can also help boost companywide returns. Viper (NASDAQ: VNOM), like fellow subsidiary Rattler Midstream (NASDAQ: RTLR) are separately traded entities.
Rattler operates, develops and acquires midstream infrastructure assets.
As you can see, Diamondback has put a tremendous amount of thought and resources into integrating the entire production process.
Most readers will recall the drop in energy prices in 2020, in the early months of the pandemic. For Diamondback, that meant three quarters of earnings and revenue declines.
The company has been profitable for many years, and 2020 didn't change that. However, 2020 earnings dropped to $3.04 per share, down from $6.45 per share in 2019.
This year, with energy demand and prices on the rise again, Wall Street expects an increase of 237% to $10.20 per share.
Next year, that's seen rising another 48% to $15.19 per share.
Although as consumers, we don't particularly enjoy higher prices at the gas pump, there's a lot more that goes into energy demand. As investors, any time an industry can command higher prices, that could present an opportunity.
Outperforming Its Index
With a market capitalization of $20.04 billion, Diamondback is a component of the S&P 500 large-cap index. As such, the comparison to this index is apt.
Diamondback's year-to-date performance is trouncing that of its index.
The company has steadily increased its dividend in recent years. Currently, the dividend is $1.80 per share with a trailing dividend yield of 1.49%.
The stock clearly has a lot going for it, and appears to have future potential.
Does that mean it's buyable right now?
Currently, with shares trading 8% higher than their breakout point, they are likely a bit extended, meaning a pullback, even a small one, could happen in the near future. However, the stock has been getting solid support along their 10-day moving average.
While a buy on a dip to the 50-day line is often recommended, you may end up waiting awhile, as the stock is currently 27.5% above that key indicator.
A number of equities analysts have weighed in on FANG shares. Wells Fargo & Company reaffirmed a "buy" rating on shares of Diamondback Energy in a research report on Tuesday, September 14th. KeyCorp increased their target price on Diamondback Energy from $112.00 to $117.00 and gave the company an "overweight" rating in a research report on Thursday, October 14th. Roth Capital raised their price objective on Diamondback Energy from $115.00 to $135.00 and gave the stock a "buy" rating in a research report on Tuesday. Morgan Stanley lifted their target price on Diamondback Energy from $111.00 to $122.00 and gave the stock an "overweight" rating in a report on Wednesday, October 6th. Finally, Truist Securities boosted their price objective on Diamondback Energy from $130.00 to $148.00 and gave the stock a "buy" rating in a research report on Thursday, October 7th. Three analysts have rated the stock with a hold rating, twenty-one have given a buy rating and one has assigned a strong buy rating to the company. According to MarketBeat.com, the company has an average rating of "Buy" and an average price target of $102.04.
The firm has a market capitalization of $19.99 billion, a PE ratio of -12.57, a price-to-earnings-growth ratio of 0.48 and a beta of 2.58. The business's 50-day moving average price is $85.38 and its 200-day moving average price is $83.53. The company has a quick ratio of 0.55, a current ratio of 0.58 and a debt-to-equity ratio of 0.62.
Diamondback Energy (NASDAQ:FANG) last announced its quarterly earnings data on Sunday, August 1st. The oil and natural gas company reported $2.40 earnings per share (EPS) for the quarter, topping the consensus estimate of $2.19 by $0.21. Diamondback Energy had a negative net margin of 30.34% and a positive return on equity of 9.49%. The business had revenue of $1.68 billion for the quarter, compared to the consensus estimate of $1.33 billion. During the same quarter last year, the company posted $0.15 earnings per share. Diamondback Energy's quarterly revenue was up 295.5% on a year-over-year basis. On average, analysts anticipate that Diamondback Energy will post 10.35 EPS for the current fiscal year.
The business also recently declared a quarterly dividend, which was paid on Thursday, August 19th. Stockholders of record on Thursday, August 12th were paid a $0.45 dividend. The ex-dividend date was Wednesday, August 11th. This is a boost from Diamondback Energy's previous quarterly dividend of $0.40. This represents a $1.80 dividend on an annualized basis and a dividend yield of 1.63%. Diamondback Energy's dividend payout ratio is 59.21%.
Diamondback Energy Company Profile (NASDAQ:FANG)
Diamondback Energy, Inc is an independent oil and natural gas company, which engages in the acquisition, development, exploration and exploitation of unconventional, onshore oil and natural gas reserves. It operates through the Upstream and Midstream Services segments. The Upstream segment focuses on the Permian Basin operations in West Texas.
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