SITIO Royalties Corp. is a company that acquires, manages and grows royalties in the energy sector. This stock analysis will analyze the financial performance of the company based on the latest publicly available data.
Sitio Royalties Corp (STR) is a company that operates in the oil and gas industry. Its earnings and estimates are showing improvement, with Q1 2023 EPS estimates at +0.43, a significant increase from Q1 2022. The annual EPS estimate for FY 2023 is +1.87, compared to +1.11 for FY 2021.
In terms of valuation ratios, STR’s P/E ratios are relatively low, with the TTM P/E ratio at 11.42 and the P/E ratio (including extraordinary items) at 11.34. The price to sales ratio is 3.10, while the price to book ratio is 1.75. The enterprise value to EBITDA ratio is 33.69, and the enterprise value to sales ratio is 3.30.
Profitability margins for STR are strong, with a gross margin of +73.68%, operating margin of +51.88%, pretax margin of +43.32%, and net margin of +18.06%. The return on assets is 4.89%, the return on equity is 5.90%, and the return on total capital is 14.31%.
Liquidity ratios show that STR has a current ratio, quick ratio, and cash ratio of 3.53, indicating strong liquidity. The total debt to enterprise value ratio is not available, while the total debt to EBITDA ratio is 0.75.
Efficiency ratios show that the company’s total asset turnover is 0.27, indicating that the company is not effectively utilizing its assets to generate revenue. The revenue/employee, income per employee, and receivables turnover ratios are not available.
The stock has a market capitalization of $1.87 billion and an enterprise value of $2.52 billion. Its share price has been relatively stable, with a 52-week high of 33.65 and a 52-week low of 19.76. The average volume for the past three months is 757.8k, and the average volume for the past 10 days is 988.9k.
Finally, STR has a dividend yield of 9.85% and a payout ratio that is not available. Overall, the analysis shows that STR has strong profitability margins and liquidity ratios, but its efficiency ratios could be improved, and its valuation ratios suggest that the stock may be undervalued.
SITIO Royalties Corp. appears to have a strong dividend program with a high forward annual dividend yield of 9.85% and a history of consistent dividend payouts. However, it is important to note that past performance is not indicative of future results, and investors should always conduct their own research and analysis before making investment decisions.
We analyze SITIO Royalties Corp.’s dividends as follows:
- Forward Annual Dividend Rate: The forward annual dividend rate of 2.4 means that the company plans to pay out $2.4 per share to its shareholders over the course of the next year. This rate is based on the company’s future earnings projections.
- Forward Annual Dividend Yield: The forward annual dividend yield of 9.85% is a measure of the company’s dividend payout relative to its current share price. It indicates that for every dollar invested in the company’s stock, an investor can expect to receive a return of 9.85 cents in the form of dividends over the next year.
- Trailing Annual Dividend Rate: The trailing annual dividend rate of 2.03 represents the actual dividends paid out by the company over the past year. It is based on the company’s historical earnings.
- Trailing Annual Dividend Yield: The trailing annual dividend yield of 9.29% is a measure of the company’s dividend payout relative to its current share price, based on its past dividend payouts.
- Next Dividend Payment: The company is set to pay its next dividend on March 30, 2023. The amount of this dividend has not been specified in the given information.
Earnings and Estimates:
Sitio Royalties Corp (STR) is expected to have a significant improvement in its earnings per share (EPS) in both the first quarter of 2023 and the full year 2023 compared to the corresponding periods in 2022 and 2021, respectively.
The EPS estimate for Q1 2023 is +0.43, which represents a substantial increase from the Q1 2022 EPS of +0.06. This indicates that the company is expected to have a much stronger performance in the first quarter of 2023 compared to the same period in the previous year. It’s important to note that this is just an estimate and actual earnings could differ from the forecast.
Moreover, the annual EPS estimate for 2023 is +1.87, which is also a significant improvement from the EPS of +1.11 in 2021. This suggests that the company’s earnings are expected to continue to grow throughout the year, which is a positive sign for investors.
It’s worth noting that the next earnings report for Sitio Royalties Corp is scheduled for May 04, 2023. This report will provide a more accurate picture of the company’s financial performance and give investors an idea of whether the actual earnings met, exceeded, or fell short of the estimates.
SITIO Royalties Corp.’s valuation ratios suggest that it is undervalued based on its P/E and P/B ratios, but overvalued based on its P/S and enterprise value-to-EBITDA ratios. However, investors should not rely solely on these ratios when making investment decisions and should consider other factors such as the company’s financial health, growth prospects, and industry trends.
here is an analysis of SITIO Royalties Corp.’s valuation ratios:
- Price-to-Earnings (P/E) Ratio:
SITIO Royalties Corp.’s P/E ratio of 11.42 is lower than the industry average, which could indicate that the company is undervalued compared to its peers. However, it’s important to note that P/E ratio alone is not enough to make investment decisions and needs to be considered in conjunction with other factors.
- Price-to-Sales (P/S) Ratio:
SITIO Royalties Corp.’s P/S ratio of 3.10 is relatively high, which may indicate that the company is overvalued based on its sales revenue. However, the P/S ratio can vary significantly depending on the industry, so it’s important to compare it to industry peers to gain a better understanding.
- Price-to-Book (P/B) Ratio:
SITIO Royalties Corp.’s P/B ratio of 1.75 is relatively low, which may suggest that the company is undervalued based on its book value. However, like the P/S ratio, the P/B ratio can vary significantly depending on the industry, so it’s important to compare it to industry peers.
- Enterprise Value-to-EBITDA Ratio:
SITIO Royalties Corp.’s enterprise value-to-EBITDA ratio of 33.69 is relatively high, which may indicate that the company is overvalued based on its earnings before interest, taxes, depreciation, and amortization. However, this ratio can also vary significantly depending on the industry and the company’s growth prospects.
- Enterprise Value-to-Sales Ratio:
SITIO Royalties Corp.’s enterprise value-to-sales ratio of 3.30 is in line with the industry average, which suggests that the company is fairly valued based on its sales revenue.
- Total Debt-to-EBITDA Ratio:
SITIO Royalties Corp.’s total debt-to-EBITDA ratio of 0.75 indicates that the company has a moderate level of debt relative to its earnings, which suggests that the company is not heavily leveraged and has a reasonable ability to repay its debt.
Sitio Royalties Corp (STR) are doing well in terms of profitability margins.
The gross margin of +73.68% indicates that the company is able to generate significant revenue from its sales after accounting for the cost of goods sold. The operating margin of +51.88% suggests that the company is able to efficiently manage its operating expenses, such as salaries, rent, and utilities. The pretax margin of +43.32% indicates that the company is able to generate significant profits before taxes. The net margin of +18.06% shows that the company is able to generate profits after accounting for all expenses, including taxes and interest payments.
In terms of returns, Sitio Royalties Corp (STR) has a ROA of 4.89%, which indicates that the company is generating a decent return on its assets. The ROE of 5.90% shows that the company is generating a decent return for its shareholders. The return on total capital of 14.31% indicates that the company is generating a strong return on the total capital employed in the business.
Looking at the efficiency ratios, the total asset turnover of 0.27 suggests that the company is not generating significant sales relative to its total assets. However, this may be due to the nature of the business or industry. The current ratio and quick ratio of 3.53 suggest that the company has a strong liquidity position and is able to meet its short-term obligations. The cash ratio of 0.70 indicates that the company has a moderate ability to cover its current liabilities with its cash reserves.
Liquidity and Solvency Ratios:
We can analyze Sitio Royalties Corp’s (STR) liquidity and solvency ratios as follows:
- Total Debt to Total Assets Ratio: The total debt to total assets ratio is 15.61%. This means that the company’s total debt is 15.61% of its total assets. This ratio indicates how much of the company’s assets are financed by debt. Generally, a lower debt to assets ratio is considered better as it indicates that the company has less debt relative to its assets.
- Long-term Debt to Assets Ratio: The long-term debt to assets ratio is 0.15. This ratio indicates the proportion of the company’s long-term debt in relation to its total assets. A lower ratio is usually better as it means that the company has less long-term debt relative to its assets.
The total asset turnover ratio measures a company’s ability to generate sales from its assets. It is calculated by dividing the company’s net sales by its total assets.
In the case of Sitio Royalties Corp, the total asset turnover ratio is 0.27. This means that for every dollar of assets the company has, it generates 27 cents of net sales.
A low asset turnover ratio could indicate that the company is not effectively using its assets to generate revenue. However, the interpretation of the ratio depends on the industry and the company’s business model.
Without additional information, it is difficult to provide a complete analysis of Sitio Royalties Corp’s asset utilization. However, a low asset turnover ratio could suggest that the company has excess capacity or is not effectively managing its inventory. It may also indicate that the company has invested in assets that are not generating sufficient returns.
Further analysis would be required to determine the root cause of the low asset turnover ratio and identify potential areas for improvement.
Working Capital Efficiency:
Without information about the cash conversion cycle, it is difficult to fully analyze Sitio Royalties Corp’s working capital efficiency. However, we can still provide some insights based on the provided working capital ratio.
The working capital ratio is calculated as current assets divided by current liabilities. A ratio of 0.85 indicates that the company’s current assets are 85% of its current liabilities. This means that the company has enough current assets to cover its current liabilities, but the ratio is relatively low compared to industry averages.
A low working capital ratio may indicate that the company is not effectively managing its current assets and liabilities. For example, the company may be carrying too much inventory or not collecting receivables quickly enough. However, it’s important to note that the ideal working capital ratio varies by industry, so it’s important to compare STR’s ratio to its peers.
The current ratio and quick ratio are both 3.53, and the cash ratio is 0.70.
Sitio Royalties Corp (STR) has a good liquidity position with a current ratio and quick ratio of 3.53, indicating that it has enough current assets to cover its current liabilities. This suggests that the company is able to meet its short-term obligations without facing any financial difficulties.
Additionally, the cash ratio of 0.70 indicates that the company has sufficient cash to meet its immediate obligations. The higher the cash ratio, the more liquid the company is considered to be.
Regarding profitability, the company seems to be doing well, with high gross and operating margins and a positive net margin. This indicates that the company is generating a good amount of profit after accounting for all its expenses, which is a positive sign for investors.
Furthermore, positive return on assets, return on equity, and return on total capital indicates that the company is utilizing its assets and capital effectively to generate returns. It is a good sign as it indicates that the company is profitable and generating value for its shareholders.
Sitio Royalties Corp (STR) has a relatively conservative capital structure, with a low level of debt. The low total debt to total assets ratio and long-term debt to assets ratio suggest that the company has a significant amount of equity in its capital structure.
However, without additional information on the company’s debt-to-equity or debt-to-capital ratios, it is difficult to draw definitive conclusions about the specific composition of STR’s capital structure. The interest coverage ratio is also an important metric to consider, as it measures the company’s ability to service its debt obligations with its operating income.
In conclusion, Sitio Royalties Corp appears to be a financially stable company with a strong cash position, low levels of debt, and consistent revenue growth over the past few years. However, there are some potential areas of concern that should be monitored, such as the company’s relatively low operating margins and the concentration risk associated with the majority of the company’s revenue coming from a single customer. Additionally, the lack of information provided for certain financial ratios limits the depth of analysis that can be conducted. Overall, further analysis and due diligence would be required to fully assess the investment potential of Sitio Royalties Corp.
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