Chord Energy’s 21% return over the past six months has outpaced the S&P 500 by 7.4%, and its stock price has climbed to $149.09 per share. This was partly thanks to its solid quarterly results, and the run-up might have investors contemplating their next move.
Is now still a good time to buy CHRD? Or are investors being too optimistic? Find out in our full research report, it’s free.
Why Are We Positive on Chord Energy?
Holding the largest acreage position in the Williston Basin, Chord Energy (NASDAQ: CHRD) drills for and produces crude oil, natural gas liquids, and natural gas in North Dakota's Williston Basin.
1. Skyrocketing Revenue Shows Strong Momentum
Cyclical industries such as Energy can make mediocre companies look great for a time, but a long-term view reveals which businesses can actually withstand and adapt to changing conditions. Luckily, Chord Energy’s sales grew at an incredible 25.1% compounded annual growth rate over the last five years. Its growth beat the average energy upstream and integrated energy company and shows its offerings resonate with customers.
2. Economies of Scale Give It Negotiating Leverage with Suppliers
In Energy, scale separates fragile single-asset producers from platform-style businesses that generate revenue across entire basins and infrastructure networks.
Chord Energy’s $6.32 billion of revenue in the last year is large for the industry, suggesting the company has hit a level of diversification where investors can sleep easy at night.
3. Excellent Free Cash Flow Margin Boosts Reinvestment Potential
Free cash flow isn’t a prominently featured metric in company financials and earnings releases, but we think it’s telling because it accounts for all operating and capital expenses, making it tough to manipulate. Cash is king.
Chord Energy has shown terrific cash profitability, driven by its lucrative business model that enables it to reinvest, return capital to investors, and stay ahead of the competition. The company’s free cash flow margin was among the best in the energy upstream and integrated energy sector, averaging 23.3% over the last five years.
Final Judgment
These are just a few reasons why Chord Energy is a cream-of-the-crop energy upstream and integrated energy company, and with its shares outperforming the market lately, the stock trades at 9.6× forward P/E (or $149.09 per share). Is now a good time to buy? See for yourself in our full research report, it’s free.
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