One of my core Bakken holdings (70% of its oil production comes from this shale region), Whiting Petroleum (WLL), delivered results after the bell Wednesday. The company provided plenty to make its shareholders happy. This fast-growing producer looks poised to move significantly higher over the coming months, especially if this nascent rally in oil prices over the last few days continues.
Here are key highlights from Whiting's earnings report:
- Earnings per share came in at 94 cents a share, 4 cents a share above consensus estimates.
- Revenue also beat on the upside by some 3%, coming in at $605 million for the quarter.
- Production was up 10% year over year to over 89,000 BOE/D (barrels of oil equivalent).
- 87% of production was oil and liquids during the quarter.
Whiting Petroleum Corporation is an independent energy concern producing oil and gas primarily in the Permian Basin, Rocky Mountains, Mid-Continent, Gulf Coast, and Michigan regions of the United States.
Here are five additional reasons why WLL is undervalued at $46 a share:
- The 32 analysts that cover the stock have a $60 median price target on the stock, some 30% above the current price.
- WLL sells near the bottom of its five-year valuation range based on P/E, P/S, P/B, and P/CF.
- The company has grown revenue at better than an 18% CAGR over the past five years. Analysts expect sales to increase at an approximate 14% CAGR over the next two fiscal years. The stock sports a five-year projected PEG of under 1 (.95).
- The company has grown operating cash flow (OCF) by better than 40% over the past two completed fiscal years. The stock is priced at just under four times OCF (around five times enterprise value).
- Given growth in revenues and cash flow, WLL is cheap at less than 11 times 2014's projected earnings.