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Energy Stocks Roundup 04/06/2020: KOS, VET, SUN

Written by Wealth Daily Research Team
Posted April 6, 2020

Today is Monday, April 6, 2020, and this is your daily energy stocks roundup. Today we’re looking at the valuations of Kosmos Energy (NYSE: KOS), Vermilion Energy (NYSE: VET), and Sunoco (NYSE: SUN).

Kosmos Energy (NYSE: KOS)

Kosmos Energy (NYSE: KOS) is a $421.3 million company today with a one-year return of -85.98%. Let’s look at its price-to-earnings (P/E) ratio, its enterprise-value-to-free-cash-flow (EV/CF) ratio, and its debt-to-equity ratio to gauge whether or not it’s a good investment.

The company's P/E ratio of 14.63 is 152.37% higher than the industry average of 5.797. That’s not good. A company’s P/E ratio shows its price as a multiple of its earnings per share (EPS). A relatively high P/E ratio is generally an indicator that a company is overvalued.

Kosmos Energy's enterprise-value-to-free-cash-flow (EV/FCF) ratio of 7.784 is 55.29% lower than its industry average of 17.41. That’s good.

A company’s EV/FCF ratio measures its enterprise value (market cap adjusted for cash holdings and debt) against its free cash flow (how much money the company has after all of its cash outflows). A low EV/FCF ratio indicates that a company is performing efficiently, managing its debt well, and maintaining a strong cash position.

The debt-to-equity (D/E) ratio of Kosmos Energy has increased by 5.95% over the last year. That's not good.

A company’s D/E ratio equals its total liabilities divided by its shareholder equity. It’s a measure of a company’s financial leverage. A declining D/E ratio indicates that a company is decreasing its debt burden over time, while a rising ratio indicates that a company is taking on more debt over time.

Kosmos Energy has scored favorably on 1 of our 3 valuation metrics. With this in mind, we believe the stock is slightly overvalued.

Vermilion Energy (NYSE: VET)

Vermilion Energy (NYSE: VET) is a $560.71 million company today with a one-year return of -85.87%. Judging by its price-to-earnings (P/E) ratio, its enterprise-value-to-free-cash-flow (EV/CF) ratio, and its debt-to-equity ratio, is it a good investment?

The company's P/E ratio of 22.72 is 428.49% higher than the industry average of 4.299. That’s not good.

Vermilion Energy's enterprise-value-to-free-cash-flow (EV/FCF) ratio of 8.823 is 10.48% lower than its industry average of 9.856. That’s good.

The debt-to-equity (D/E) ratio of Vermilion Energy has increased by 23.04% over the last year. That's not good.

Vermilion Energy has scored favorably on 1 of our 3 valuation metrics. With this in mind, we believe the stock is slightly overvalued.

Sunoco (NYSE: SUN)

Sunoco (NYSE: SUN) is a $1.311 billion company today with a one-year return of -53.12%. Is it a good value based on its price-to-earnings (P/E) ratio, its enterprise-value-to-free-cash-flow (EV/CF) ratio, and its debt-to-equity ratio?

The company's P/E ratio of 5.599 is 7.56% lower than the industry average of 6.057. That’s good.

Sunoco's enterprise-value-to-free-cash-flow (EV/FCF) ratio of 14.89 is 6.18% lower than its industry average of 15.87. That’s good.

The debt-to-equity (D/E) ratio of Sunoco has increased by 6.32% over the last year. That's not good.

Sunoco has scored favorably on 2 of our 3 valuation metrics. With this in mind, we believe the stock is a good value.

To summarize, we believe Kosmos Energy (NYSE: KOS) is slightly overvalued, Vermilion Energy (NYSE: VET) is slightly overvalued, and Sunoco (NYSE: SUN) is a good value.

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