Is Diamondback Energy Inc (FANG) overvalued?
On Equity Rank's model estimate, FANG trades 13% above its fair value. Diamondback Energy Inc (FANG) last closed at $178.96; the multi-method model fair value is $157.77.
| Price | Model fair value | Price vs model |
|---|---|---|
| $178.96 | $157.77 | 13% above |
What the answer rests on
- 6 of 12 valuation methods put FANG's value above its price and 6 put it below, so the methods disagree.
- To justify today's price, FANG's free cash flow would need to grow about -7.8% a year for ten years (a reverse discounted cash flow). Over the last three years it actually grew 22.9% a year.
- FANG trades at 24.6 times its last year's earnings, against a median of 10.8 for 14 profitable energy_ep companies.
- Over the past year the price sat below the model fair value on 1% of trading days. The gap ranged from 0% below to 31% above the model fair value.
Read this before relying on it
The model fair value is an estimate from published financial statements. It is not a forecast of where the price goes, and it can be wrong. Within 10% either side we call it close to fair value: valuation models are not precise enough to read more into a smaller gap. Our own lists have no proven edge over the market yet; the live record shows every result, misses included.
Every valuation method behind FANG's fair value · What prices assume · Other companies