Companies are trading at a 10% FCF except VET 27% FCF Q3So most energy companies are trading at a less than10% FCF yield, except for a few and one of them is VET that is traded at a 27% anualized FCF in Q3 2024, and if you look at a trailing 4 quarters their average cash flow per quarter was 174 million or $1.12 a share. In a single year that amounts to 696 million in FCF, assuming 155 million shares and a 15 dollar share price.
You get $4.49 a share or a $4.49/15 = 30% FCF Yield
You can confirm this your self just look, they paid 46 cents in dividends, they paid off 409 million in debt, and they bough back more than 8 million shares. The used the money wisely.
Now listed to Eric Nuttall, gas prices are up, and VET has gas shut in that will likely be coming back to the market, he is forcasting $3.50 Nymex i am forcasting17 dollars European gas.
So VET has an inssurance policy that almost no other company has, 50% of their EU gas hedged at european prices the right side of the LNG trade for 24,25,26 and their starting to hedge 2027
These are compelling numbers and you can see why these analyst like Eric Nuttall don't like dividends because they companies are barely generating FCF. Like ARX if you look at it last two quarters and account for dividends there is not much in terms of FCF, except from their asset sale.
So VET if it generate $1 dollar per share a quarter in FCF, which is much less than it 12 month average with 155 million shares at 15 dollars its anualized FCF yeild is 27%. If its FCF yeild was reduced to %16 percent which is still better than almost any other oil and gas company they would have a share price of 27/16*15 = 25 dollars.
VET should be trading for $25 dollars.
In My Humble Opinion
MHP