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Texas Pacific Land (TPL - Free Report) is a Zacks Rank #1 (Strong Buy) that is landowners principally in the State of Texas. The Company generates revenue from pipeline, power line and utility easements, commercial leases, material sales and seismic and temporary permits related to land uses including midstream infrastructure projects and hydrocarbon processing facilities.
The stock took off in late 2020 and into 2021, moving from $400 to $1770. From there, the stock saw a slow descent, back under the $1000 level earlier this year.
But investors have been buying the stock since those bottoms in Q1. The stock is back at all time highs and should be watched for buying opportunities.
More about TPL
The company describes itself as a “Pure play in the Permian Basin”. Texas Pacific Land was founded in 1888 and is headquartered in Dallas, Texas. It employs about 100 people and has a market cap of $13.5 billion.
TPL engages in the land and resource management, and water services and operations businesses.
The company's Land and Resource Management segment manages approximately 880,000 acres of land in 19 counties in the western part of Texas. It rents this land out to oil and gas producers that pay fees for use of that that land.
Texas Pacific also has a Water Services and Operations segment that provides full-service water offerings.
The stock has a Zacks Style Score of “B” in Momentum and “C” in Growth. However, it has a “F” in Value, due to the high Forward PE of 28. While the PE is high, investors value the free cash flow more, which has been high due to higher energy prices.
Q1 Earnings
On May 4th, TPL reported an 8% EPS miss for Q1. While the company missed the estimates, the year over year numbers came in almost double from last year.
For earnings, the company saw $12.64 v the $6.45 last year. And for revenues, $147.M vs the $84.2M last year.
The company raised their dividend 9.1% and boosted their special dividend to $20 a share.
Here are some comments from management on the special dividend and the quarter:
“With tailwinds of favorable commodity prices, strong production, and a debt-free balance sheet, we’re pleased to announce a $20 per share special dividend as our shareholders reap the windfall of supportive underlying fundamentals.”
The company added that the dividend is on top of their $100 million share repurchase program and they will continue to return capital back to shareholders.
Estimates Rising
Analyst are getting excited about the upcoming quarters and raising estimates across all time frames.
Ove the last month, estimates for the current quarter have gone from $15.10 to $15.84, a move of 5%. For the current year, we have seen a move of 3.5% higher, with estimates moving from $60.73 to $62.91.
Next year’s estimates are also moving higher. Over the last 60 days, estimates have gone from $67.26 to $70.60, or 5%.
Strength in a Weak Market
TPL has not only been a great place to hide, it has been very rewarding. The stock is up almost 50% so far in 2022 and over 120% since the beginning over 2020.
In addition to the appreciation, investors are being rewarding with a small annual dividend and of course, the large special dividend. Investors should expect more special dividends in the future, due to the free cash flow that is being generated from high energy prices.
The Technical Take
The stock is trading at all-time highs so instead of chasing it, investors might want to be patient and look for pullbacks.
The 21-day moving average is at $1600, while the 50-day is at $1550. The 200-day MA is all the way down at $1330 and not likely to hit anytime soon.
Looking at the Fibonacci levels, the pullback earlier this year came down into the 61.8% retracement at $930 and held. Investors looking for upside targets could target the -23.6% level at $2075.
In Summary
When markets are weak, investors should look for relative strength. Not only is TPL relatively strong, but the stock has taken off to all-time highs. This is a very positive sign for investors and when market sentiment improves, the stock could really get going.
Investors should watch energy prices when owing a name like this. A large drop in oil and natural gas could destroy the narrative.
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Bull of the Day: Texas Pacific Land (TPL)
Texas Pacific Land (TPL - Free Report) is a Zacks Rank #1 (Strong Buy) that is landowners principally in the State of Texas. The Company generates revenue from pipeline, power line and utility easements, commercial leases, material sales and seismic and temporary permits related to land uses including midstream infrastructure projects and hydrocarbon processing facilities.
The stock took off in late 2020 and into 2021, moving from $400 to $1770. From there, the stock saw a slow descent, back under the $1000 level earlier this year.
But investors have been buying the stock since those bottoms in Q1. The stock is back at all time highs and should be watched for buying opportunities.
More about TPL
The company describes itself as a “Pure play in the Permian Basin”. Texas Pacific Land was founded in 1888 and is headquartered in Dallas, Texas. It employs about 100 people and has a market cap of $13.5 billion.
TPL engages in the land and resource management, and water services and operations businesses.
The company's Land and Resource Management segment manages approximately 880,000 acres of land in 19 counties in the western part of Texas. It rents this land out to oil and gas producers that pay fees for use of that that land.
Texas Pacific also has a Water Services and Operations segment that provides full-service water offerings.
The stock has a Zacks Style Score of “B” in Momentum and “C” in Growth. However, it has a “F” in Value, due to the high Forward PE of 28. While the PE is high, investors value the free cash flow more, which has been high due to higher energy prices.
Q1 Earnings
On May 4th, TPL reported an 8% EPS miss for Q1. While the company missed the estimates, the year over year numbers came in almost double from last year.
For earnings, the company saw $12.64 v the $6.45 last year. And for revenues, $147.M vs the $84.2M last year.
The company raised their dividend 9.1% and boosted their special dividend to $20 a share.
Here are some comments from management on the special dividend and the quarter:
“With tailwinds of favorable commodity prices, strong production, and a debt-free balance sheet, we’re pleased to announce a $20 per share special dividend as our shareholders reap the windfall of supportive underlying fundamentals.”
The company added that the dividend is on top of their $100 million share repurchase program and they will continue to return capital back to shareholders.
Estimates Rising
Analyst are getting excited about the upcoming quarters and raising estimates across all time frames.
Ove the last month, estimates for the current quarter have gone from $15.10 to $15.84, a move of 5%. For the current year, we have seen a move of 3.5% higher, with estimates moving from $60.73 to $62.91.
Next year’s estimates are also moving higher. Over the last 60 days, estimates have gone from $67.26 to $70.60, or 5%.
Strength in a Weak Market
TPL has not only been a great place to hide, it has been very rewarding. The stock is up almost 50% so far in 2022 and over 120% since the beginning over 2020.
In addition to the appreciation, investors are being rewarding with a small annual dividend and of course, the large special dividend. Investors should expect more special dividends in the future, due to the free cash flow that is being generated from high energy prices.
The Technical Take
The stock is trading at all-time highs so instead of chasing it, investors might want to be patient and look for pullbacks.
The 21-day moving average is at $1600, while the 50-day is at $1550. The 200-day MA is all the way down at $1330 and not likely to hit anytime soon.
Looking at the Fibonacci levels, the pullback earlier this year came down into the 61.8% retracement at $930 and held. Investors looking for upside targets could target the -23.6% level at $2075.
In Summary
When markets are weak, investors should look for relative strength. Not only is TPL relatively strong, but the stock has taken off to all-time highs. This is a very positive sign for investors and when market sentiment improves, the stock could really get going.
Investors should watch energy prices when owing a name like this. A large drop in oil and natural gas could destroy the narrative.