Price to Operating Profit (P/OP)
since 2012
Calculation
Diamondback Energy Inc., P/OP, long-term trends, calculation
| P/OP | = | Share price1, 2, 3 | ÷ | Operating profit per share1 | Operating profit per share1 | = | Income (loss) from operations1 (in millions) |
÷ | No. shares of common stock outstanding2 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|
| Feb 24, 2022 | 5.67 | = | 127.89 | ÷ | 22.55 | 22.55 | = | 4,001 | ÷ | 177,414,969 | |
| Feb 25, 2021 | — | = | 69.06 | ÷ | -34.65 | -34.65 | = | -5,476 | ÷ | 158,015,647 | |
| Feb 27, 2020 | 13.55 | = | 59.48 | ÷ | 4.39 | 4.39 | = | 695 | ÷ | 158,284,486 | |
| Feb 25, 2019 | 17.12 | = | 105.29 | ÷ | 6.15 | 6.15 | = | 1,011 | ÷ | 164,381,522 | |
| Feb 15, 2018 | 20.31 | = | 125.15 | ÷ | 6.16 | 6.16 | = | 605 | ÷ | 98,167,289 | |
| Feb 15, 2017 | — | = | 111.84 | ÷ | -0.76 | -0.76 | = | -69 | ÷ | 90,143,934 | |
| Feb 19, 2016 | — | = | 72.08 | ÷ | -10.37 | -10.37 | = | -740 | ÷ | 71,397,041 | |
| Feb 20, 2015 | 20.80 | = | 75.09 | ÷ | 3.61 | 3.61 | = | 213 | ÷ | 58,900,083 | |
| Feb 19, 2014 | 30.21 | = | 61.04 | ÷ | 2.02 | 2.02 | = | 95 | ÷ | 47,106,216 | |
| Mar 1, 2013 | 47.74 | = | 22.34 | ÷ | 0.47 | 0.47 | = | 17 | ÷ | 36,986,532 |
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31), 10-K (reporting date: 2013-12-31), 10-K (reporting date: 2012-12-31).
1 US$
2 Data adjusted for splits and stock dividends.
3 Closing price as at the filing date of Diamondback Energy Inc. Annual Report.
The financial trajectory from 2013 to 2022 is characterized by high volatility in operational earnings and a significant long-term compression of the valuation multiple. While the share price experienced a general upward trend over the decade, the operating profit per share exhibited extreme cyclicality, with periods of substantial losses alternating with periods of rapid growth.
- Share Price Movement
- An overall upward progression is observed, starting from 22.34 US$ in 2013 and reaching a peak of 125.15 US$ by February 2018. A significant correction occurred between 2018 and 2020, with the price dropping to a low of 59.48 US$. However, a strong recovery followed, with the price ending the period at 127.89 US$ in February 2022.
- Operating Profit Volatility
- Operational profitability shows extreme fluctuations. Profits grew steadily from 0.47 US$ in 2013 to 3.61 US$ in 2015, followed by a sharp decline into negative territory in 2016 (-10.37 US$) and 2017 (-0.76 US$). After a period of stability around 6.15 US$ in 2018 and 2019, a severe contraction occurred in 2021, with operating profit per share falling to -34.65 US$. This was followed by a massive surge to 22.55 US$ in 2022.
- P/OP Ratio Analysis
- The Price to Operating Profit ratio demonstrates a consistent downward trend during the years in which profit was positive. The ratio contracted from 47.74 in 2013 to 20.80 in 2015. Following the recovery of profits in 2018, the ratio continued its decline, moving from 20.31 in 2018 to 13.55 in 2020, and eventually reaching a period low of 5.67 in 2022. This indicates that the market valuation relative to operating earnings has decreased significantly over the decade.
The absence of P/OP ratios in 2016, 2017, and 2021 correlates directly with the negative operating profit per share recorded in those years. The sharp decline in the P/OP ratio by 2022 suggests that the increase in operating profit per share has outpaced the growth in share price, leading to a lower valuation multiple.
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