Don’t Walk On The Range, RUN, Away As Fast As You Can. ( $RRC $CHK $BHP $DVN $SWN $CLR )
Several of our articles recently have touched on the major problems natural gas producers are having and how they are impacting their financial statements. You see majors like $BHP writing off major natural gas plays and other stables like $CHK cutting back the majority of their exploration budgets. When the economics don’t make sense you do what you do. While we will contend that $RRC is a great overall company, you also have to be realistic when something is overvalued, and I mean overvalued.
Range Resources Corporation (RRC) is a United States-focused natural gas company which recently traded at astronomical price-to-earnings multiples over 200. It is an awesome company whose earnings cumulative average growth rate is expected to top 20%. Unfortunately, even this prodigious growth just doesn’t justify its valuation multiples. When compared to its peers, it is readily apparent that investors should stay away from RRC shares at current price levels, even after considering growth projections.
Computing Future Valuations from Growth Projections
Regardless of how shiny a stock is, investors should never buy a stock because the company is fancy, disruptive, or because it is fun to read about. Media coverage, drama, the next big thing, and other distractors cannot justify paying one dollar for fifty cents.
Instead, investors should be focused on growing the value of their assets through purchasing stocks for less than what they are worth. A poor company trading at a dismal price may be an excellent trade. RRC shares are trading at the other extreme: Range Resources is a great company trading at incredibly enthusiastic valuations which should be avoided. Its metrics are provided with other independent United States-focused oil and gas companies:
|Ticker||Company||P/E||Earnings Growth Est.||P/S||Sales Growth Est.|
This is not an offer to buy or sell securities. Oil investment carries with it very high risks. The information contained within this site has not been nor will it be verified by Turn Key Oil and is subject to change at any time. We are not a United States Securities Dealer or Broker or United States Investment Adviser. Do your own due diligence and consult with a licensed professional before making any investment decisions. Please read our full disclaimer before making any decisions.