| Name of Company | Country of Origin/ Exchange Traded | Sector | Stock Price | ||||||||
| WHITECAP RESOURCES INC | Canada/ TSX |
Energy – Oil & Gas – E&P – Oil & Gas E&P | CAD7.75 | ||||||||
| @ 15 Sep 2018 | |||||||||||
| COMPANY PROFILE | Whitecap Resources Inc is an oil and gas company. It is engaged in the acquisition, development, optimization, and production of crude oil and natural gas properties and assets in Western Canada.
Whitecap Resources Inc focuses on the acquisition, development, optimization, and production of crude oil and natural gas in western Canada. The company acquires assets with discovered petroleum initially in place and low current recovery factors. Light oil is the primary byproduct of Whitecap’s Canadian assets. To extract petroleum products from its resources, the company uses horizontal drilling, in addition to multistage fracturing technology. Crude oil is the leading revenue generator out of the basket of energy products sold by Whitecap. |
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| Stock Code | WCP | ||||||||||
| Stock Valuation Below | |||||||||||
| Price to Earnings, Price to Sales and Price to Cash Flow ratios all value a company based on what it is generating (i.e. profits, sales or cash flow). Price to Book ratio is different in that it values a company based on what it owns (i.e. its net assets). This is usually a suitable valuation indicator for a financial institution, which frequently revalues its assets and liabilities, or a company with huge asset base e.g. utilities company. | |||||||||||
| At the price of CAD7.75 as at 15 Sep 2018, Whitecap Resources Inc is trading at a Price to Book Ratio of 1.0 times current book value. This is a 19.0% discount to current fair Price to Book Ratio of 1.2 times. | |||||||||||
| Is the stock undervalued? One should not just look at one indicator to determine the fair value of a stock. | |||||||||||
| ProThinker believes in using a combination of valuation methods to decide whether a stock is over or undervalued? The five ratios we use are Price to Earnings, Price to Sales, Price to Cash Flow, Price to Book and Dividend Yield. We use multiple methods to value a stock because each has its benefits as well as shortcomings. Price to Earnings and Price to Cash Flow Ratios relate stock price to profitability but are meaningless when the comany has negative earnings or cash flows. Price to Sales Ratio is more stable because sales are never negative. However, this does not tell us whether the company is able to sell profitably. Price to Book Ratio gives us an indication as to how much we are paying for the company’s assets but it is not directly related to the company’s profitability. Dividend Yield cannot be used for companies that are paying little to no dividends. | |||||||||||
| While it is important to value stocks based on multiple valuation methods, this often leads to differing views on valuation. One indicator may suggest that a stock is overvalued while another suggest that it is undervalued. This does not help an investor who needs to make a definite decision whether to buy, hold or sell the stock. That is why we advocate the use of a Composite Valuation Indicator, which is derived from the best combination of the five indicators above. A Composite Valuation Indicator will give you ONE conclusion on whether a stock is under or over valued. | |||||||||||
| To find out more about our valuation methodology, click here. | |||||||||||
| Source of Data: Company description, historical financial statements data and price data are from gurufocus.com or moneycontrol.com. Estimates are from marketscreener.com – Thomson Reuters. | |||||||||||
| Disclaimer: This report is for information purposes only and should not be considered a solicitation to buy or sell any security. Neither ProThinker nor any other party guarantees its accuracy or makes warranties regarding results from its usage. Redistribution is prohibited without the express written consent of ProThinker. Copyright(c) 2018. All rights reserved. | |||||||||||