Riley Exploration Permian, Inc. (REPKS – Free Report) was recently on the Zacks.com Most Popular Stocks list. So, you can consider some key factors that could affect the stock’s performance in the near future.
Shares of this company have returned -18.8% over the past month, compared to a change in the Zacks S&P 500 Index of +1.6%. The Zacks Oil and Gas – Exploration and Production – United States industry, which includes Riley Exploration Permian, Inc., lost 2.3% during the period. Now the key question is: where might the stock go in the near term?
While media reports or rumors of significant changes in a company’s business outlook usually make its stock “trending” and lead to immediate price changes, there are always some fundamental facts that ultimately dominate buy-and-hold decisions. .
Revision of the profit estimate
Instead of focusing on anything else, we at Zacks prioritize evaluating a company’s earnings forecast change. This is because we believe that the fair value of its shares is determined by the present value of its future income stream.
Essentially, we look at how sell-side analysts covering the stock are revising their earnings estimates to reflect the impact of recent business trends. And when a company’s earnings estimates rise, the fair value of its stock rises. A higher fair value than the current market price stimulates investors’ interest in buying the stock, leading to an increase in its value. This is why empirical research shows a strong correlation between trends in earnings estimates revisions and short-term stock price movements.
Riley Exploration Permian, Inc.’s earnings are expected to will be $2.12 per share for the current quarter, representing a year-over-year change of +49.3%. Over the last 30 days, the Zacks Consensus Estimate has changed -4.7%.
The consensus earnings estimate of $8.86 for the current fiscal year indicates a year-over-year change of +54.9%. This estimate has changed by -3.1% in the last 30 days.
For the next fiscal year, the consensus estimate for earnings of $14.39 indicates a change of +62.4% from what Riley Exploration Permian, Inc. reports. a year ago. Over the last month, the estimate has changed by +3.5%.
Our proprietary stock valuation tool, Zacks Rank, which has a long, externally audited track record, offers a more compelling picture of near-term stock price direction as it effectively exploits earnings revisions. Due to the size of the recent consensus estimate change, as well as three other factors related to earnings estimates, Riley Exploration Permian, Inc. earned a Zacks Rank #3 (Hold).
The chart below shows the company’s 12-month change in the consensus EPS estimate:
12-month earnings per share
Projected income growth
While a company’s revenue growth is perhaps the best indicator of its financial health, nothing much happens if it can’t grow its revenue. It is almost impossible for a company to grow its revenue without growing revenue over a long period of time. Therefore, knowing the company’s potential revenue growth is critical.
For Riley Exploration Permian, Inc. the consensus estimate for sales for the current quarter is $100.23 million, representing a year-over-year change of +13.4%. For the current and next fiscal years, estimates of $388.79 million and $552 million show changes of +33.6% and +42%, respectively.
Latest results and history of surprises
Riley Exploration Permian, Inc. reported revenue of $67.01 million in the last reported quarter, which represents a year-over-year change of -0.4%. Earnings per share are $1.26 for the same period, compared with $1 a year ago.
The reported revenue represented a +7.31% surprise compared to the Zacks Consensus Estimate of $62.45 million. EPS surprise was -4.55%.
Over the past four quarters, Riley Exploration Permian, Inc. beat consensus EPS estimates by three times. The company beat consensus revenue estimates every time during that period.
Assessment
No investment decision can be effective without taking stock valuation into account. Whether the current stock price correctly reflects the intrinsic value of the company’s core business and growth prospects is a significant factor in determining its future price performance.
Comparing the current value of a company’s valuation multiples, such as its price-to-earnings (P/E), price-to-sales (P/S), and price-to-cash flow (P/CF), with its own historical values helps determine whether the company is fairly valued, whether its shares are overvalued or undervalued, while comparing the company to its peers on these parameters gives a good idea of the reasonable price of its shares.
The Zacks Value Style Score (part of the Zacks Style Scores system), which pays close attention to both traditional and non-traditional valuation metrics to rank stocks from A to F (An is better than B; B is better than C; and so on below), is very helpful in determining whether a stock is overvalued, correctly valued, or temporarily undervalued.
Riley Exploration Permian, Inc. is graded B in this regard, indicating that it trades at a discount to its peers. Click here to see the values of some of the evaluation metrics that led to this grade.
Conclusion
The facts discussed here and a lot of other information on Zacks.com can help determine whether you should pay attention to the market noise regarding Riley Exploration Permian, Inc. the wider market in the near term.
The New Gold Rush: How Lithium Batteries Will Make Millionaires
As the electric car revolution expands, investors have a chance to make huge profits. Millions of lithium batteries are being produced and demand is expected to grow by 889%.
Download the brand new FREE report that shows 5 EV battery stocks are about to soar.