Magnolia Oil & Gas Corp (NYSE: MGY)

Sector: Energy Industry: Oil & Gas E&P CIK: 0001698990
Market Cap 4.89 Bn
P/B 2.52
P/E 15.03
P/S 3.73
ROIC (Qtr) 15.09
Div Yield % 2.31
Rev 1y % (Qtr) -2.75
Total Debt (Qtr) 393.25 Mn
Debt/Equity (Qtr) 0.20
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About

Investment thesis

Bull case

  • Strong operating cash flow of 878.64M provides robust 2.23x coverage of total debt 393.25M, indicating excellent debt servicing capability and financial flexibility.
  • Operating cash flow of 878.64M provides exceptional 73.06x coverage of minority interest expenses 12.03M, showing strong core operations.
  • Operating cash flow of 878.64M provides strong 32.24x coverage of stock compensation 27.26M, indicating sustainable incentive practices.
  • Operating cash flow of 878.64M provides exceptional 40.65x coverage of interest expenses 21.62M, showing strong debt service capability.
  • Strong tangible asset base of 2.90B provides 7.38x coverage of total debt 393.25M, indicating robust asset backing and low credit risk.

Bear case

  • Operating cash flow of 878.64M barely covers its investment activities of (540.75M), with a coverage ratio of -1.62, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • Investment activities of (540.75M) provide weak support for R&D spending of 962000, which is -562.11x, suggesting potentially insufficient investment in innovation relative to other capital deployment.
  • Operating cash flow of 878.64M provides thin coverage of dividend payments of (113.10M) with a -7.77 ratio, suggesting potential dividend sustainability issues if operational performance deteriorates.
  • Cash reserves of 266.79M provide limited coverage of acquisition spending of (66.59M), which is -4.01x, suggesting aggressive expansion might strain liquidity if market conditions deteriorate.
  • Operating earnings of 427M show weak coverage of depreciation charges of 437.76M, with a 0.98 ratio indicating high capital intensity and potential reinvestment needs.

Peer comparison

Companies in the Oil & Gas E&P
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 COP Conocophillips 136.62 Bn 17.10 2.22 23.44 Bn
2 CNQ Canadian Natural Resources Ltd 85.21 Bn 17.67 3.04 12.51 Bn
3 EOG Eog Resources Inc 66.33 Bn -60.48 8.67 8.13 Bn
4 FANG Diamondback Energy, Inc. 49.64 Bn -2,818.83 314.47 16.24 Bn
5 OXY Occidental Petroleum Corp /De/ 37.18 Bn 15.36 2.56 22.88 Bn
6 WDS Woodside Energy Group Ltd 34.64 Bn 11.73 2.51 -
7 TPL Texas Pacific Land Corp 29.74 Bn 126.16 78.66 0.02 Bn
8 DVN Devon Energy Corp/De 18.80 Bn 3.24 1.91 8.55 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 1.72 1.02
EV to Cash from Ops. EV/CFO 5.69 18.21
EV to Debt EV to Debt 12.72 54.57
EV to EBIT EV/EBIT 11.72 29.98
EV to EBITDA EV/EBITDA 5.70 19.64
EV to Free Cash Flow [EV/FCF] EV/FCF 12.54 39.33
EV to Market Cap EV to Market Cap 1.02 1.57
EV to Revenue EV/Rev 3.81 11.47
Price to Book Value [P/B] P/B 2.52 2.97
Price to Earnings [P/E] P/E 15.03 -25.98
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Div Coverage (Qtr) 2.88 26.80
Dividend Payout Ratio % Div Payout % (Qtr) 34.70 31.86
Dividend per Basic Share Div per Share (Qtr) 0.60 0.78
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 27.92 1.05
Interest Coverage Int. cover (Qtr) 19.75 -4.97
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) 1.90 -533.65
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) 2.59 52.06
Dividend Growth (1y) % Div 1y % (Qtr) 11.11 -5.45
EBIAT Growth (1y) % EBIAT 1y % (Qtr) -9.23 6.14
EBITDA Growth (1y) % EBITDA 1y % (Qtr) -5.35 105.89
EBIT Growth (1y) % EBIT 1y % (Qtr) -10.33 75.94
EBT Growth (1y) % EBT 1y % (Qtr) -12.22 17.44
EPS Growth (1y) % EPS 1y % (Qtr) -10.82 3.07
FCF Growth (1y) % FCF 1y % (Qtr) -7.63 -43.36
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) -3.38 149.32
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 0.45 0.33
Cash Payout Ratio Cash Payout (Qtr) 0.08 0.07
Cash Ratio Cash Ratio (Qtr) 0.93 1.32
Current Ratio Curr Ratio (Qtr) 1.54 2.37
Debt to Equity Ratio Debt/Equity (Qtr) 0.20 0.34
Interest Cover Ratio Int Coverage (Qtr) 19.75 -4.97
Times Interest Earned Times Interest Earned (Qtr) 19.75 -4.97
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 65.90 16.19
EBIT Margin % EBIT Margin % (Qtr) 32.55 -16.83
EBT Margin % EBT Margin % (Qtr) 30.90 -24.06
Gross Margin % Gross Margin % (Qtr) 80.70 58.92
Net Profit Margin % Net Margin % (Qtr) 24.80 -28.75