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Bull of the Day: Talos Energy (TALO)

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Talos Energy (TALO - Free Report) is a Zacks Rank #1 (Strong Buy) and sports an A for Value and another A for Growth.  This company is in oil and gas space and jprices for both oil and natural gas  look to conitnue to climb. Let’s explore more about this company in this Bull of The Day article.

Description

Talos Energy LLC engages in exploration, development and production of oil and natural gas properties. It operates primarily in the Gulf of Mexico and in the shallow waters off the coast of Mexico. Talos Energy LLC, formerly known as Stone Energy Corporation, is based in Houston, Texas..

Earnings History

When I look at a stock, the first thing I do is look to see if the company is beating the number.  This tells me right away where the market’s expectations have been for the company and how management has communicated to the market.  A stock that consistently beats has management communicating expectations to Wall Street that can be achieved.  That is what you want to see.

For TALO, I see two beats and two misses of the Zacks Consensus Estimate.  That isn’t that great to see, but by itself that is not enough to make the company a Zacks Rank #1 (Strong Buy).

The average positive earnings surprise over the course of the last year works out to be 13%.

Earnings Estimates Revisions

The Zacks Rank tells us which stocks are seeing earnings estimates move higher. 

Over the last 30 days, earning estimates haven’t moved at all for TALO

The full fiscal year 2022 has held still at $4.15 .

Next fiscal year has also held still at  $5.15

Positive movement in earnings   stock is a Zacks Rank #1 (Strong Buy).

Valuation

The valuation for this name is very attractive.  I see the forward earnings multiple work out to be less than 5x and that is super cheap for an oil and gas name.  Price to bool comes in a 1.7x which is also “super cheap.”

 Margins have seen a dramatic increase over the last three quarters.  

The operating margin was a negative number three months ago, then had a “6” handle.  The most recent quarter saw operating margin nealy double to 11.6x

 


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