Common Stock Valuation Ratios (Price Multiples)
Valuation ratios measure the quantity of an asset or flaw (e.g., earnings) associated with ownership of a specified claim (e.g., a share of ownership of the enterprise).
Current Valuation Ratios
Diamondback Energy Inc., current price multiples
| Diamondback Energy Inc. | Chevron Corp. | ConocoPhillips | Exxon Mobil Corp. | Oil, Gas & Consumable Fuels | Energy | ||||
|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data | |||||||||
| Current share price (P) | $163.55 | ||||||||
| No. shares of common stock outstanding | 175,998,577 | ||||||||
| Growth rate (g) | 7.53% | ||||||||
| Earnings per share (EPS) | $12.40 | ||||||||
| Next year expected EPS | $13.33 | ||||||||
| Operating profit per share | $22.73 | ||||||||
| Sales per share | $38.34 | ||||||||
| Book value per share (BVPS) | $68.68 | ||||||||
| Valuation Ratios (Price Multiples) | |||||||||
| Price to earnings (P/E) | 13.19 | 33.35 | 19.45 | 23.45 | 26.57 | 27.07 | |||
| Price to next year expected earnings | 12.27 | 31.89 | 17.34 | 21.64 | 25.21 | 25.66 | |||
| Price-earnings-growth (PEG) | 1.75 | 7.31 | 1.60 | 2.80 | 4.93 | 4.93 | |||
| Price to operating profit (P/OP) | 7.19 | 19.28 | 11.47 | 16.00 | 17.82 | 18.17 | |||
| Price to sales (P/S) | 4.27 | 2.22 | 2.64 | 2.09 | 2.60 | 2.63 | |||
| Price to book value (P/BV) | 2.38 | 2.20 | 2.41 | 2.61 | 3.52 | 3.58 | |||
Based on: 10-K (reporting date: 2021-12-31).
If the company price multiple is lower then the price multiple of benchmark then company stock is relatively undervalued.
Otherwise, if the company price multiple is higher then the price multiple of benchmark then company stock is relatively overvalued.
Historical Valuation Ratios (Summary)
Diamondback Energy Inc., historical price multiples
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
The valuation multiples from 2017 through 2021 indicate a general compression in price multiples, suggesting a shift in market valuation regarding earnings, sales, and operating profit, alongside a fluctuating relationship with book value.
- Earnings and Operating Profit Multiples
- The Price to Earnings (P/E) ratio exhibited significant volatility, peaking at 39.23 in 2019 before declining to 10.40 by 2021. A more consistent downward trajectory is observed in the Price to Operating Profit (P/OP) ratio, which decreased steadily from 20.31 in 2017 to 5.67 in 2021, indicating a substantial reduction in the multiple applied to operating performance over the five-year period.
- Revenue Valuation
- The Price to Sales (P/S) ratio experienced a sharp contraction between 2017 and 2019, falling from 10.36 to 2.42. Following this decline, the ratio stabilized, fluctuating between 3.36 and 3.96 during 2020 and 2021, reflecting a permanent shift to a lower valuation relative to top-line revenue.
- Book Value Valuation
- The Price to Book Value (P/BV) ratio followed a U-shaped trend. It declined from 2.34 in 2017 to a period low of 0.71 in 2019, during which the stock traded below its accounting book value. A subsequent recovery occurred, with the ratio rising to 1.24 in 2020 and reaching 1.88 by the end of 2021.
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Price to Earnings (P/E)
Diamondback Energy Inc., historical P/E calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| No. shares of common stock outstanding1 | 177,414,969 | 158,015,647 | 158,284,486 | 164,381,522 | 98,167,289 | |
| Selected Financial Data (US$) | ||||||
| Net income (loss) attributable to Diamondback Energy, Inc. (in millions) | 2,182) | (4,517) | 240) | 846) | 482) | |
| Earnings per share (EPS)2 | 12.30 | -28.59 | 1.52 | 5.14 | 4.91 | |
| Share price1, 3 | 127.89 | 69.06 | 59.48 | 105.29 | 125.15 | |
| Valuation Ratio | ||||||
| P/E ratio4 | 10.40 | — | 39.23 | 20.47 | 25.48 | |
| Benchmarks | ||||||
| P/E Ratio, Competitors5 | ||||||
| Chevron Corp. | 16.81 | — | — | — | — | |
| ConocoPhillips | 14.66 | — | — | — | — | |
| Exxon Mobil Corp. | 14.11 | — | — | — | — | |
| P/E Ratio, Sector | ||||||
| Oil, Gas & Consumable Fuels | 15.11 | — | — | — | — | |
| P/E Ratio, Industry | ||||||
| Energy | 15.67 | — | — | — | — | |
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
1 Data adjusted for splits and stock dividends.
2 2021 Calculation
EPS = Net income (loss) attributable to Diamondback Energy, Inc. ÷ No. shares of common stock outstanding
= 2,182,000,000 ÷ 177,414,969 = 12.30
3 Closing price as at the filing date of Diamondback Energy Inc. Annual Report.
4 2021 Calculation
P/E ratio = Share price ÷ EPS
= 127.89 ÷ 12.30 = 10.40
5 Click competitor name to see calculations.
The valuation metrics between 2017 and 2021 exhibit significant volatility in both share price and earnings per share, leading to substantial fluctuations in the price-to-earnings (P/E) ratio.
- Share Price and Earnings Volatility
- Share prices fluctuated from a high of 127.89 in 2021 to a low of 59.48 in 2019. This movement was mirrored and amplified by earnings per share, which ranged from a peak of 12.30 in 2021 to a substantial loss of -28.59 in 2020.
- P/E Ratio Trends
- The P/E ratio showed an inconsistent trend, starting at 25.48 in 2017 and decreasing to 20.47 in 2018. In 2019, the ratio surged to 39.23, indicating that while the share price declined, earnings per share decreased at a more rapid rate. In 2020, the ratio was not applicable due to negative earnings.
- Recovery and Valuation Compression
- By 2021, a significant recovery occurred as the share price returned to 127.89 and earnings per share rose to 12.30. Despite the price recovery, the P/E ratio compressed to 10.40, the lowest recorded value in the period, suggesting that the growth in earnings significantly outperformed the growth in share price.
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Price to Operating Profit (P/OP)
Diamondback Energy Inc., historical P/OP calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| No. shares of common stock outstanding1 | 177,414,969 | 158,015,647 | 158,284,486 | 164,381,522 | 98,167,289 | |
| Selected Financial Data (US$) | ||||||
| Income (loss) from operations (in millions) | 4,001) | (5,476) | 695) | 1,011) | 605) | |
| Operating profit per share2 | 22.55 | -34.65 | 4.39 | 6.15 | 6.16 | |
| Share price1, 3 | 127.89 | 69.06 | 59.48 | 105.29 | 125.15 | |
| Valuation Ratio | ||||||
| P/OP ratio4 | 5.67 | — | 13.55 | 17.12 | 20.31 | |
| Benchmarks | ||||||
| P/OP Ratio, Competitors5 | ||||||
| Chevron Corp. | 11.40 | — | — | — | — | |
| ConocoPhillips | 8.66 | — | — | — | — | |
| Exxon Mobil Corp. | 9.86 | — | — | — | — | |
| P/OP Ratio, Sector | ||||||
| Oil, Gas & Consumable Fuels | 10.13 | — | — | — | — | |
| P/OP Ratio, Industry | ||||||
| Energy | 10.52 | — | — | — | — | |
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
1 Data adjusted for splits and stock dividends.
2 2021 Calculation
Operating profit per share = Income (loss) from operations ÷ No. shares of common stock outstanding
= 4,001,000,000 ÷ 177,414,969 = 22.55
3 Closing price as at the filing date of Diamondback Energy Inc. Annual Report.
4 2021 Calculation
P/OP ratio = Share price ÷ Operating profit per share
= 127.89 ÷ 22.55 = 5.67
5 Click competitor name to see calculations.
The financial data reveals a period of significant volatility in both equity valuation and operational profitability from 2017 through 2021. A pronounced fluctuation in share price is mirrored by extreme swings in operating profit per share, leading to a substantial compression of the Price to Operating Profit (P/OP) multiple over the observed period.
- Share Price Trends
- The share price underwent a significant correction between 2017 and 2019, falling from 125.15 USD to 59.48 USD. Following this trough, a strong recovery phase began, with the price ascending to 69.06 USD in 2020 and returning to its previous levels at 127.89 USD by the end of 2021.
- Operating Profit Performance
- Operating profit per share remained relatively stable during 2017 and 2018, followed by a decline in 2019 to 4.39 USD. A severe operational downturn occurred in 2020, resulting in a substantial loss of 34.65 USD per share. This was followed by a sharp reversal in 2021, where operating profit surged to a period high of 22.55 USD per share.
- P/OP Ratio Interpretation
- The P/OP ratio showed a steady decline from 20.31 in 2017 to 13.55 in 2019, suggesting a contraction in the valuation multiple relative to earnings. The ratio was not applicable in 2020 due to the negative operating profit. By 2021, the ratio dropped further to 5.67. This indicates that although the share price recovered to 2017 levels, the operating profit per share grew at a much faster rate, resulting in a significantly lower valuation multiple and suggesting a higher fundamental value relative to the market price.
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Price to Sales (P/S)
Diamondback Energy Inc., historical P/S calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| No. shares of common stock outstanding1 | 177,414,969 | 158,015,647 | 158,284,486 | 164,381,522 | 98,167,289 | |
| Selected Financial Data (US$) | ||||||
| Revenue from contracts with customers (in millions) | 6,747) | 2,756) | 3,887) | 2,130) | 1,186) | |
| Sales per share2 | 38.03 | 17.44 | 24.56 | 12.96 | 12.08 | |
| Share price1, 3 | 127.89 | 69.06 | 59.48 | 105.29 | 125.15 | |
| Valuation Ratio | ||||||
| P/S ratio4 | 3.36 | 3.96 | 2.42 | 8.13 | 10.36 | |
| Benchmarks | ||||||
| P/S Ratio, Competitors5 | ||||||
| Chevron Corp. | 1.69 | — | — | — | — | |
| ConocoPhillips | 2.58 | — | — | — | — | |
| Exxon Mobil Corp. | 1.17 | — | — | — | — | |
| P/S Ratio, Sector | ||||||
| Oil, Gas & Consumable Fuels | 1.48 | — | — | — | — | |
| P/S Ratio, Industry | ||||||
| Energy | 1.52 | — | — | — | — | |
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
1 Data adjusted for splits and stock dividends.
2 2021 Calculation
Sales per share = Revenue from contracts with customers ÷ No. shares of common stock outstanding
= 6,747,000,000 ÷ 177,414,969 = 38.03
3 Closing price as at the filing date of Diamondback Energy Inc. Annual Report.
4 2021 Calculation
P/S ratio = Share price ÷ Sales per share
= 127.89 ÷ 38.03 = 3.36
5 Click competitor name to see calculations.
The valuation metrics from 2017 to 2021 indicate a significant compression in the Price-to-Sales (P/S) ratio, occurring alongside a substantial increase in sales efficiency per share.
- Price-to-Sales (P/S) Ratio Trend
- A sharp downward trajectory is observed between 2017 and 2019, with the P/S ratio falling from 10.36 to 2.42. From 2020 onward, the ratio stabilized at lower levels, recording 3.96 in 2020 and 3.36 in 2021, representing a permanent shift away from the high multiples seen in the 2017-2018 period.
- Sales per Share Performance
- Revenue generation per share demonstrated strong overall growth, increasing from 12.08 in 2017 to 38.03 in 2021. A significant surge occurred in 2019, where sales per share reached 24.56, followed by a contraction to 17.44 in 2020 and a subsequent peak in 2021.
- Share Price Volatility and Valuation Correlation
- The share price experienced a notable decline from 125.15 in 2017 to a minimum of 59.48 in 2019, which contributed to the rapid decline of the P/S ratio. While the share price recovered to 127.89 by December 31, 2021, the P/S ratio remained suppressed relative to historical levels because the growth in sales per share significantly outpaced the recovery of the stock price.
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Price to Book Value (P/BV)
Diamondback Energy Inc., historical P/BV calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| No. shares of common stock outstanding1 | 177,414,969 | 158,015,647 | 158,284,486 | 164,381,522 | 98,167,289 | |
| Selected Financial Data (US$) | ||||||
| Total Diamondback Energy, Inc. stockholders’ equity (in millions) | 12,088) | 8,794) | 13,249) | 13,699) | 5,255) | |
| Book value per share (BVPS)2 | 68.13 | 55.65 | 83.70 | 83.34 | 53.53 | |
| Share price1, 3 | 127.89 | 69.06 | 59.48 | 105.29 | 125.15 | |
| Valuation Ratio | ||||||
| P/BV ratio4 | 1.88 | 1.24 | 0.71 | 1.26 | 2.34 | |
| Benchmarks | ||||||
| P/BV Ratio, Competitors5 | ||||||
| Chevron Corp. | 1.89 | — | — | — | — | |
| ConocoPhillips | 2.61 | — | — | — | — | |
| Exxon Mobil Corp. | 1.93 | — | — | — | — | |
| P/BV Ratio, Sector | ||||||
| Oil, Gas & Consumable Fuels | 2.00 | — | — | — | — | |
| P/BV Ratio, Industry | ||||||
| Energy | 2.07 | — | — | — | — | |
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
1 Data adjusted for splits and stock dividends.
2 2021 Calculation
BVPS = Total Diamondback Energy, Inc. stockholders’ equity ÷ No. shares of common stock outstanding
= 12,088,000,000 ÷ 177,414,969 = 68.13
3 Closing price as at the filing date of Diamondback Energy Inc. Annual Report.
4 2021 Calculation
P/BV ratio = Share price ÷ BVPS
= 127.89 ÷ 68.13 = 1.88
5 Click competitor name to see calculations.
The period between 2017 and 2021 is characterized by significant volatility in both market valuation and book value, resulting in a fluctuating Price to Book Value (P/BV) ratio. The valuation trajectory exhibits a distinct U-shaped pattern, reaching a minimum in 2019 before recovering toward historical levels by the end of 2021.
- Share Price Dynamics
- A substantial decline in share price occurred between 2017 and 2019, with the value dropping from US$ 125.15 to US$ 59.48. A subsequent recovery phase began in 2020 and accelerated through 2021, culminating in a price of US$ 127.89, which effectively returned the market price to its 2017 baseline.
- Book Value per Share (BVPS) Fluctuations
- BVPS experienced an initial growth trend, rising from US$ 53.53 in 2017 to a peak of US$ 83.70 in 2019. This was followed by a sharp contraction in 2020, where the value fell to US$ 55.65, before a partial recovery to US$ 68.13 was recorded in 2021.
- Price to Book Value (P/BV) Ratio Interpretation
- The P/BV ratio declined from 2.34 in 2017 to a low of 0.71 in 2019, indicating that the equity was trading at a discount to its accounting book value during that period. The ratio reversed this trend in 2020 and 2021, rising to 1.24 and 1.88 respectively. This movement reflects a transition from market undervaluation back to a premium valuation, driven by the simultaneous recovery of the share price and the volatility of the underlying book value.
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