Cimarex Energy Co. (XEC - Free Report) stock appears to be a solid bet now, based on strong fundamentals and compelling business prospects.
This Denver, CO-based company is an independent oil & gas exploration, and production firm. The company’s operations are located mainly in Oklahoma, Kansas, Texas and New Mexico. Its exploration and production activities take place primarily in two areas: the Permian Basin and the Mid-Continent region.
The company’s shares have popped 29.3% over the past three months compared with 17.3% rally of the industry it belongs to.
Cimarex Energy, which currently carries a Zacks Rank #2 (Buy) and has a VGM Score of A, offers significant investment opportunities to investors. Here V stands for Value, G for Growth and M for Momentum. The company’s score is a weighted combination of these three scores. Our research shows that stocks with a VGM Score of A or B, when combined with a Zacks Rank #1 (Strong Buy), 2 or 3 (Hold), make solid investment choices.
Let's see what makes thestock an attractive investment option at the moment.
Shale Footprint & Other Positives
Cimarex Energy boasts a strong acreage position and presence in the prolific Permian Basin and Mid-Continent resources. Last year, the company’s output from Permian grew 51.2% year over year. Moreover, the basin contributed 69% to the company’s total volumes.
Cimarex Energy's Resolute Energy acquisition is appreciable as it is expected to aid the company to significantly increase volumes, which will be reflected in the upcoming production results. Importantly, once demand starts rising, following the closing of coronavirus-induced lockdowns, its production strength will play a huge role in boosting profits.
Cimarex Energy displays a healthy balance sheet, with low leverage and high liquidity. As of Mar 31, 2019, the company had cash and cash equivalents of $88.7 million, which can enable it to easily pay off the current debt of $66 million. Also, the company is likely to pay a portion of its $2 billion of net long-term debt due within 12 months, since the business scenario is gradually becoming favorable with improving oil prices.
Markedly, Cimarex Energy’s commitment to enhance shareholder value gives investors a reason to cheer. It is to be noted that the company increased quarterly dividend by 10% to 22 cents.
Earnings estimate revisions have the greatest impact on stock prices. Over the past two months, the Zacks Consensus Estimate for Cimarex Energy’s earnings for the current year has improved 71%. During this time period, the stock has witnessed 13 upward revisions and four downward movements.
Other Stocks to Consider
Other top-ranked players in the energy space include ConocoPhillips (COP - Free Report) , Antero Resources Corporation (AR - Free Report) and Centennial Resource Development, Inc. (CDEV - Free Report) , each holding a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
ConocoPhillips’ second-quarter earnings estimates have improved over the past 60 days, with four upward estimate revisions and one downward movement.
Antero Resources’ bottom line for second-quarter 2020 is expected to rise 33.3% year over year.
Centennial Resource’s second-quarter earnings estimates have improved over the past 30 days, with three upward estimate revisions and no downward movement.
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