Breaking Down Diamondback Energy, Inc. (FANG) Financial Health: Key Insights for Investors

Are you keeping a close watch on Diamondback Energy, Inc. (FANG) and wondering about its financial stability? With a market capitalization of $37.39 billion, Diamondback Energy is a significant player in the oil and gas sector. As of recent assessments, the stock is priced around $127.14. The company's financial health reveals a revenue growth rate of 66.10% and a return on equity of 12.92%. But how does this translate into investment potential, and what are the key metrics to consider? Let's delve deeper into Diamondback Energy's financial landscape to equip you with the insights needed to make informed decisions.

Diamondback Energy, Inc. (FANG) Revenue Analysis

Diamondback Energy, Inc. (FANG) is an independent oil and natural gas company focused on the acquisition, development, exploration, and exploitation of unconventional, onshore oil and natural gas reserves in the Permian Basin in West Texas. Understanding the sources and trends in Diamondback Energy's revenue is crucial for investors. For further insights, you might find this resource helpful: Breaking Down Diamondback Energy, Inc. (FANG) Financial Health: Key Insights for Investors.

Here's a breakdown of Diamondback Energy's revenue streams:

• Primary Revenue Sources: Diamondback Energy primarily generates revenue from the sale of crude oil, natural gas, and natural gas liquids (NGLs). The vast majority of their revenue is derived from crude oil sales.
• Year-over-Year Revenue Growth: Diamondback Energy's financial performance showcases significant revenue fluctuations influenced by market dynamics. In 2023, the company reported total revenue of $7.79 billion, a notable decrease of -17.28% from 2022, which saw revenues of $9.42 billion. Looking back further, 2021 recorded revenues of $5.44 billion. This historical trend underscores the volatile nature of the oil and gas industry, where revenues can be heavily impacted by commodity prices and production levels.
• Business Segment Contribution: As an upstream oil and gas company, Diamondback Energy has one primary business segment which is the exploration and production of oil, natural gas, and NGLs.
• Changes in Revenue Streams: Diamondback Energy's revenue streams are primarily influenced by commodity prices and production volume. Any significant changes in these factors will impact the company's revenue. Strategic acquisitions and divestitures can also impact revenue streams.

Here's a table summarizing Diamondback Energy's revenue over the past few years (in USD billions):

Diamondback Energy, Inc. (FANG) Profitability Metrics

Analyzing Diamondback Energy, Inc. (FANG)'s profitability involves examining several key metrics that provide insights into the company's financial health and operational efficiency. These metrics include gross profit margin, operating profit margin, and net profit margin. Additionally, comparing these ratios with industry averages and analyzing trends over time offers a comprehensive view of the company's profitability.

Here's an overview of Diamondback Energy, Inc. (FANG)'s profitability:

• Gross Profit Margin:
• For the quarter that ended in December 2024, the gross margin was 41.13%.
• For the fiscal year that ended in December 2024, the gross margin was 45.11%.
• The average gross margin for 2023 was 87.68%, a 3.31% decline from 2022.
• The average gross margin for 2022 was 90.68%, a 5.08% decline from 2021.
• The average gross margin for 2021 was 86.3%, an 8.51% increase from 2020.
• Operating Profit Margin:
• The operating margin for the quarter that ended in December 2024 was 39.02%.
• For the fiscal year that ended in December 2024, the operating margin was 42.63%.
• Diamondback Energy's 5-Year Average Operating Margin % Growth Rate was 11.70% per year.
• Net Profit Margin:
• The net profit margin for the quarter ending December 31, 2024, was 30.16%.
• The average net profit margin for 2023 was 41.25%, a 1.32% decline from 2022.
• The average net profit margin for 2022 was 41.8%, a 238.96% decline from 2021.
• The average net profit margin for 2021 was -30.08%, a 68.25% decline from 2020.

A comparison of profitability ratios with industry averages, as of a report in 2023, shows:

Diamondback Energy's cash operating costs for the third quarter of 2024 were $11.49 per BOE, including:

• Lease operating expenses ('LOE') of $5.67 per BOE.
• Cash general and administrative ('G&A') expenses of $0.69 per BOE.
• Production and ad valorem taxes of $2.77 per BOE.
• Gathering, processing, and transportation expenses of $1.17 per BOE.

Diamondback Energy's cash operating costs for the third quarter of 2024 were $11.49 per BOE, including:

• Lease operating expenses ('LOE') of $6.01 per BOE,
• Cash general and administrative ('G&A') expenses of $0.63 per BOE,
• Production and ad valorem taxes of $2.91 per BOE
• Gathering, processing and transportation expenses of $1.94 per BOE.

These figures indicate the company's operational efficiency and cost management effectiveness.

Explore more about Diamondback Energy's investor profile: Exploring Diamondback Energy, Inc. (FANG) Investor Profile: Who’s Buying and Why?

Diamondback Energy, Inc. (FANG) Debt vs. Equity Structure

Diamondback Energy, Inc. (FANG) employs a mix of debt and equity to fuel its growth and operational activities. Understanding the specifics of their debt levels, ratios, and financing activities provides key insights into the company's financial strategy.

As of December 31, 2024, Diamondback Energy's financial structure includes the following:

• Total Debt: $6.579 billion
• Long-Term Debt: $6.579 billion
• Short-Term Debt: $0 million

These figures highlight that Diamondback Energy's debt is primarily long-term, indicating a strategic approach to managing its financial obligations over an extended period. The absence of short-term debt suggests the company is not heavily reliant on immediate, pressing liabilities.

The debt-to-equity ratio is a critical metric for evaluating a company's financial leverage. As of the end of 2024, Diamondback Energy's debt-to-equity ratio stands at approximately 0.72. This ratio is calculated by dividing the total liabilities by shareholder equity. A ratio of 0.72 suggests that Diamondback Energy has a balanced capital structure, relying on a reasonable amount of debt relative to equity.

To provide a clearer perspective, the following table summarizes Diamondback Energy, Inc.'s (FANG) debt and equity details:

Diamondback Energy actively manages its debt through various financial activities. In 2024, the company has strategically approached debt management, which includes refinancing activities aimed at optimizing interest rates and extending maturity profiles.

Balancing debt and equity is crucial for sustainable growth. Diamondback Energy's approach involves:

• Maintaining a reasonable debt-to-equity ratio to ensure financial stability.
• Utilizing debt financing for strategic acquisitions and development projects.
• Attracting equity funding through stock offerings to strengthen its balance sheet.

These strategies enable Diamondback Energy to maintain financial flexibility while pursuing its operational and strategic objectives. More insights about the company can be found at: Mission Statement, Vision, & Core Values of Diamondback Energy, Inc. (FANG).

Diamondback Energy, Inc. (FANG) Liquidity and Solvency

Liquidity and solvency are critical indicators of a company's financial health, revealing its ability to meet short-term obligations and sustain long-term operations. For Diamondback Energy, Inc. (FANG), assessing these metrics provides insights into its financial resilience and operational efficiency. Here’s an overview of Diamondback Energy's liquidity and solvency, incorporating key financial ratios and data.

Assessing Diamondback Energy, Inc.'s Liquidity:

Diamondback Energy's liquidity position can be evaluated through its current and quick ratios, working capital trends, and cash flow statements.

• Current and Quick Ratios: These ratios measure a company's ability to cover its short-term liabilities with its short-term assets.
  • The current ratio is calculated by dividing current assets by current liabilities.
  • The quick ratio, also known as the acid-test ratio, excludes inventory from current assets to provide a more conservative measure of liquidity.
• Working Capital Trends: Analyzing the trend of working capital (current assets minus current liabilities) helps to understand the company's operational efficiency and short-term financial health.
• Cash Flow Statements Overview: A review of cash flow statements reveals the trends in operating, investing, and financing activities, offering a clear picture of how Diamondback Energy generates and uses cash.

Cash Flow Analysis

Analyzing Diamondback Energy’s cash flow statements provides insights into its operational efficiency and financial stability. Here’s a breakdown:

• Operating Cash Flow: A positive and stable operating cash flow indicates the company’s ability to generate cash from its core business activities.
• Investing Cash Flow: This section shows cash used for investments in assets, such as property, plant, and equipment (PP&E).
• Financing Cash Flow: This reflects cash flow related to debt, equity, and dividends.

For the fiscal year 2023, Diamondback Energy reported:

• Net cash provided by operating activities: $4.88 billion.
• Purchase of property and equipment: $2.26 billion.
• Proceeds from the issuance of long-term debt: $1.11 billion.
• Repayments of long-term debt: $1.39 billion.
• Dividends paid: $916 million.

Here is a table summarizing Diamondback Energy's Cash Flow Data for the fiscal year 2023

Any potential liquidity concerns or strengths will be discussed based on the ratios and data, offering a comprehensive view of Diamondback Energy's financial health.

To delve deeper into investor profiles and understand who is investing in Diamondback Energy, Inc. (FANG) and why, check out: Exploring Diamondback Energy, Inc. (FANG) Investor Profile: Who’s Buying and Why?

Diamondback Energy, Inc. (FANG) Valuation Analysis

Analyzing whether Diamondback Energy, Inc. (FANG) is overvalued or undervalued involves examining several key financial ratios and indicators. Here's a breakdown of the latest data:

• Access more insights in this comprehensive analysis: Breaking Down Diamondback Energy, Inc. (FANG) Financial Health: Key Insights for Investors

Price-to-Earnings (P/E) Ratio

As of April 17, 2025, Diamondback Energy's P/E ratio stands at 8.86. This is based on a recent Earnings Per Share (EPS) of $15.53 and a stock price of $137.64. Historically, the average P/E ratio for Diamondback Energy over the last eight years has been 16.75. The current P/E ratio is 47% less than this historical average, suggesting that the stock might be undervalued compared to its past performance.

Other sources provide slightly different P/E ratios:

• 8.38 as of April 17, 2025.
• 9.35 as of April 20, 2025.
• 8.72 (TTM - Trailing Twelve Months).
• 8.86 (FY - Fiscal Year).

These variations may be due to different reporting periods or data sources, but they all hover around the same range, indicating a relatively consistent valuation based on earnings.

Price-to-Book (P/B) Ratio

The Price-to-Book (P/B) ratio is another critical metric for assessing valuation. As of April 2025, Diamondback Energy's P/B ratio is approximately 1.0. Other sources list the P/B ratio as:

• 0.99 as of April 17, 2025.
• 0.9217 as of April 2025.
• 1.06 (MRQ - Most Recent Quarter).
• 1.06 (FY - Fiscal Year).

A P/B ratio of around 1.0 suggests that the market values the company's assets at approximately their book value. This could indicate that the stock is fairly valued.

Enterprise Value-to-EBITDA (EV/EBITDA) Ratio

The EV/EBITDA ratio provides insight into how the company is valued relative to its earnings before interest, taxes, depreciation, and amortization. Diamondback Energy's latest twelve months EV/EBITDA is 6.8x. Historically, Diamondback Energy's EV/EBITDA for fiscal years ending December 2020 to 2024 averaged 6.4x. Looking at the past five years, the EV/EBITDA ratio peaked in December 2021 at 8.8x and hit a low in December 2022 at 4.2x.

Other data points include:

• 7.0 as of April 21, 2025.
• 7.39 according to another source.
• 6.69 according to another source.

These figures suggest that Diamondback Energy is reasonably valued compared to its earnings, considering its capital structure.

Stock Price Trends

Diamondback Energy's stock price has experienced significant volatility over the past year. As of April 16, 2025, the stock price was around $127.14. Recent data indicates a price of $137.64 as of April 17, 2025. The 52-week range is between $114.00 and $214.50, highlighting substantial price fluctuations.

However, over the last 12 months, the stock price has fallen by approximately 31.03%.

Dividend Yield and Payout Ratios

Diamondback Energy offers an attractive dividend yield. The dividend yield is approximately 4.73%, translating to $4.73 in dividends per year for every $100 invested. The payout ratio is 47.27%, indicating that a substantial portion of earnings is returned to shareholders while allowing the company to reinvest in growth opportunities.

Additional dividend information includes:

• Annual dividend: $6.51 per share.
• Increased annual base dividend by 11% to $4.00 per share.
• Declared Q4 2024 base cash dividend of $1.00 per share payable on March 13, 2025.

Analyst Consensus

Analyst sentiment towards Diamondback Energy is overwhelmingly positive. The consensus rating is 'Buy,' with many analysts recommending a 'Strong Buy.'

Key points from analyst ratings:

• As of April 20, 2025, the consensus rating is 'Buy' based on the analysis of 50 analysts.
• 50% of analysts recommend a 'Strong Buy,' 42% recommend 'Buy,' and 8% suggest 'Hold.'
• The average price target is $194.90, representing a potential upside of 41.60% from the current price.
• Price targets range from $161.00 to $242.00.

Based on these analyst ratings, the stock is perceived to have significant upside potential.

Additional Considerations

Here's a summary table of Diamondback Energy, Inc. (FANG) valuation metrics:

Overall, Diamondback Energy appears to be potentially undervalued based on its P/E and EV/EBITDA ratios compared to historical averages and industry peers. The strong buy recommendations from analysts and a solid dividend yield further support the case for investment. However, investors should consider the inherent volatility in the energy sector and conduct thorough due diligence before making any investment decisions.

Diamondback Energy, Inc. (FANG) Risk Factors

Diamondback Energy, Inc. (FANG) faces a variety of internal and external risks that could significantly impact its financial health. These risks span industry competition, regulatory changes, and volatile market conditions, all of which demand careful consideration by investors.

Industry Competition: The oil and gas industry is intensely competitive. Diamondback Energy competes with numerous other companies, including major integrated oil companies, national oil companies, and independent producers. Increased competition can lead to lower prices and reduced profitability. Key competitive factors include:

• Price Volatility: Oil and gas prices are subject to significant volatility due to global supply and demand, geopolitical events, and economic conditions.
• Production Costs: Efficiency in drilling and production is crucial. Companies with lower production costs have a competitive advantage.
• Technological Advancements: Innovation in drilling techniques, such as hydraulic fracturing, can impact production efficiency and costs.
• Reserves: Access to and development of proven reserves are vital for sustained production and growth.

Regulatory Changes: The oil and gas industry is heavily regulated, and changes in regulations can significantly affect Diamondback Energy's operations and financial performance. These include:

• Environmental Regulations: Stricter environmental regulations can increase compliance costs and limit drilling activities.
• Tax Policies: Changes in tax laws, such as production taxes or income taxes, can impact profitability.
• Permitting Processes: Delays in obtaining drilling permits can slow down production and increase costs.
• Climate Change Policies: Policies aimed at reducing greenhouse gas emissions can affect the demand for fossil fuels and increase costs for oil and gas companies.

Market Conditions: Unfavorable market conditions can negatively impact Diamondback Energy's financial results. These include:

• Economic Downturns: Economic recessions can reduce demand for oil and gas, leading to lower prices.
• Interest Rate Fluctuations: Changes in interest rates can impact borrowing costs and the attractiveness of investments in oil and gas companies.
• Geopolitical Instability: Political instability in oil-producing regions can disrupt supply and lead to price volatility.
• Supply Chain Disruptions: Disruptions in the supply chain can increase costs and delay production.

Recent earnings reports and filings highlight several operational, financial, and strategic risks. Operationally, Diamondback Energy faces risks related to drilling and production, including well performance, operational disruptions, and accidents. Financially, the company is exposed to risks associated with commodity price volatility, debt levels, and access to capital markets. Strategically, Diamondback Energy faces risks related to its growth strategy, including acquisitions, development projects, and competition for resources.

Diamondback Energy employs several mitigation strategies to address these risks. These include:

• Hedging: Using financial instruments to protect against commodity price volatility.
• Cost Management: Implementing measures to control and reduce operating costs.
• Diversification: Investing in a diverse portfolio of assets to reduce exposure to specific risks.
• Regulatory Compliance: Maintaining compliance with all applicable laws and regulations.

Here is a table summarizing some key risk factors and mitigation strategies:

For further insights, check out: Breaking Down Diamondback Energy, Inc. (FANG) Financial Health: Key Insights for Investors

Diamondback Energy, Inc. (FANG) Growth Opportunities

Diamondback Energy, Inc. (FANG) is strategically positioned for future growth, driven by several key factors. These include its focus on operational efficiency, strategic acquisitions, and development in the Permian Basin. The company's ability to enhance production while maintaining cost discipline is crucial for sustained growth.

Key growth drivers for Diamondback Energy, Inc. (FANG) include:

• Operational Efficiency: Diamondback's focus on optimizing drilling and completion techniques to improve well productivity while reducing costs.
• Strategic Acquisitions: The company has a track record of making strategic acquisitions to expand its footprint in core areas of the Permian Basin.
• Permian Basin Development: Continued development of its extensive acreage in the Permian Basin, which is known for its prolific oil and gas production.

Future revenue growth projections and earnings estimates for Diamondback Energy, Inc. (FANG) depend significantly on oil and gas prices. According to the 2024 data, Diamondback Energy's revenue was $6.78 billion. Analysts' estimates typically project continued revenue growth, contingent on stable to increasing commodity prices and the company's ability to execute its development plans efficiently. Earnings estimates also depend on cost management and production optimization.

Strategic initiatives and partnerships that may drive future growth include:

• Technological Innovations: Implementing advanced technologies to enhance drilling and production efficiencies.
• Infrastructure Development: Investing in infrastructure to support increased production volumes and reduce transportation costs.
• Partnerships: Collaborating with other companies to share resources and expertise in the Permian Basin.

Diamondback Energy, Inc. (FANG) possesses several competitive advantages that position it for growth:

• Large Acreage Position: A substantial and contiguous acreage position in the Permian Basin provides ample drilling opportunities.
• Low-Cost Operations: Efficient operations and cost-effective drilling techniques enhance profitability.
• Experienced Management Team: A seasoned management team with a proven track record of value creation.

For additional insights into Diamondback Energy, Inc. (FANG)'s financial health, you can explore: Breaking Down Diamondback Energy, Inc. (FANG) Financial Health: Key Insights for Investors