Talos Energy Inc. (NYSE: TALO)

Sector: Energy Industry: Oil & Gas E&P CIK: 0001724965
Market Cap 2.23 Bn
P/B 0.94
P/E -6.25
P/S 1.19
ROIC (Qtr) -6.26
Div Yield % 0.00
Rev 1y % (Qtr) -11.63
Total Debt (Qtr) 1.24 Bn
Debt/Equity (Qtr) 0.52
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About

Investment thesis

Bull case

  • Strong operating cash flow of 1.08B provides robust 0.87x coverage of total debt 1.24B, indicating excellent debt servicing capability and financial flexibility.
  • Healthy cash reserves of 408.41M provide 111.16x coverage of short-term debt 3.67M, demonstrating strong liquidity position and minimal refinancing risk.
  • Operating cash flow of 1.08B provides strong 56.72x coverage of stock compensation 19.10M, indicating sustainable incentive practices.
  • Strong tangible asset base of 5.70B provides 4.59x coverage of total debt 1.24B, indicating robust asset backing and low credit risk.
  • Strong operating cash flow of 1.08B provides 6.89x coverage of SG&A expenses 157.16M, showing efficient operational cost management.

Bear case

  • Operating cash flow of 1.08B barely covers its investment activities of (556.94M), with a coverage ratio of -1.95, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • Cash reserves of 408.41M provide limited coverage of acquisition spending of (37.57M), which is -10.87x, suggesting aggressive expansion might strain liquidity if market conditions deteriorate.
  • Operating cash flow of 1.08B provides minimal -21.13x coverage of tax expenses of (51.27M), suggesting potential tax planning inefficiencies or unsustainable tax positions.
  • Operating earnings of (243.37M) show weak coverage of depreciation charges of 1.21B, with a -0.20 ratio indicating high capital intensity and potential reinvestment needs.
  • Free cash flow of 569.37M represents just -3.95x of debt issuance (144.14M), suggesting concerning reliance on leverage rather than internal cash generation for growth.

Consolidation Items Breakdown of Revenue (2024)

Consolidation Items Breakdown of Revenue (2024)

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 0.53 1.02
EV to Cash from Ops. EV/CFO 2.77 18.21
EV to Debt EV to Debt 2.42 54.57
EV to EBIT EV/EBIT -12.34 29.98
EV to EBITDA EV/EBITDA 3.26 19.64
EV to Free Cash Flow [EV/FCF] EV/FCF 5.28 39.33
EV to Market Cap EV to Market Cap 1.35 1.57
EV to Revenue EV/Rev 1.60 11.47
Price to Book Value [P/B] P/B 0.94 2.97
Price to Earnings [P/E] P/E -6.25 -25.98
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Dividend Coverage Ratio 0.00 26.80
Dividend Payout Ratio % Div Payout % (Qtr) 0.00 31.86
Dividend per Basic Share Div per Share (Qtr) 0.00 0.78
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 0.00 1.05
Interest Coverage Int. cover (Qtr) -1.48 -4.97
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) -8.25 -533.65
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) 170.57 52.06
Dividend Growth (1y) % Dividend Growth (1y) % 0.00 -5.45
EBIAT Growth (1y) % EBIAT 1y % (Qtr) -172.73 6.14
EBITDA Growth (1y) % EBITDA 1y % (Qtr) -24.51 105.89
EBIT Growth (1y) % EBIT 1y % (Qtr) -195.48 75.94
EBT Growth (1y) % EBT 1y % (Qtr) -731.90 17.44
EPS Growth (1y) % EPS 1y % (Qtr) -467.27 3.07
FCF Growth (1y) % FCF 1y % (Qtr) 80.95 -43.36
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) 3.95 149.32
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 0.33 0.33
Cash Payout Ratio Cash Payout (Qtr) 0.00 0.07
Cash Ratio Cash Ratio (Qtr) 0.64 1.32
Current Ratio Curr Ratio (Qtr) 1.27 2.37
Debt to Equity Ratio Debt/Equity (Qtr) 0.52 0.34
Interest Cover Ratio Int Coverage (Qtr) -1.48 -4.97
Times Interest Earned Times Interest Earned (Qtr) -1.48 -4.97
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 51.70 16.19
EBIT Margin % EBIT Margin % (Qtr) -12.99 -16.83
EBT Margin % EBT Margin % (Qtr) -21.76 -24.06
Gross Margin % Gross Margin % (Qtr) 72.80 58.92
Net Profit Margin % Net Margin % (Qtr) -19.00 -28.75