Texas Pacific Land (TPL) AI Stock Analysis

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Texas Pacific Land

(NYSE:TPL)

76Outperform

Texas Pacific Land is well-positioned within the oil and gas industry with strong financial metrics and operational efficiency. The company benefits from minimal debt and significant cash reserves, while technical indicators show moderate momentum. However, valuation concerns due to a high P/E ratio and low dividend yield temper the overall score. The earnings call reinforces confidence with record production and robust financial performance, though potential risks from commodity price fluctuations and regional activity declines remain.

Texas Pacific Land (TPL) vs. S&P 500 (SPY)

Market Cap

$32.65B

Dividend Yield0.39%

Average Volume (3M)117.29K

Price to Earnings (P/E)71.0

Beta (1Y)1.09

Revenue Growth10.36%

EPS Growth6.37%

CountryUS

Employees111

SectorEnergy

Sector Strength42

IndustryOil & Gas Exploration & Production

Share Statistics

EPS (TTM)5.24

Shares Outstanding22,987,326

10 Day Avg. Volume114,340

30 Day Avg. Volume117,293

Financial Highlights & Ratios

PEG Ratio55.87

Price to Book (P/B)26.40

Price to Sales (P/S)0.00

P/FCF Ratio457.43

Enterprise Value/Market Cap0.91

Enterprise Value/Revenue10.85

Enterprise Value/Gross Profit46.13

Enterprise Value/Ebitda13.49

Forecast

1Y Price Target

$1,090.00

Price Target Upside-20.48% Downside

Rating ConsensusHold

Number of Analyst Covering0

Texas Pacific Land Business Overview & Revenue Model

Company DescriptionTexas Pacific Land Corporation engages in the land and resource management, and water services and operations businesses. The company's Land and Resource Management segment manages approximately 880,000 acres of land. This segment also holds own a 1/128th nonparticipating perpetual oil and gas royalty interest (NPRI) under approximately 85,000 acres of land; a 1/16th NPRI under approximately 371,000 acres of land; and approximately 4,000 additional net royalty acres located in the western part of Texas. In addition, this segment engages in easements and commercial leases activities, such as oil, gas and related hydrocarbons, power line and utility easements, and subsurface wellbore easements. Further, this segment leases its land for processing, storage, and compression facilities and roads; and is involved in sale of materials, such as caliche. Its Water Services and Operations segment provides full-service water offerings, including water sourcing, produced-water gathering/treatment, infrastructure development, disposal solutions, water tracking, analytics, and well testing services to operators in the Permian Basin. This segment also holds royalties for water sourced from its land. Texas Pacific Land Corporation was founded in 1888 and is headquartered in Dallas, Texas.

How the Company Makes MoneyTexas Pacific Land makes money primarily through three key revenue streams: royalties from oil and gas production, land sales and leases, and water services. The company earns royalties by granting exploration and production companies the rights to extract oil and gas from its lands in exchange for a percentage of the production revenue. In addition to royalties, TPL generates income by selling or leasing its land holdings for various purposes, including energy development and agriculture. Furthermore, TPL provides water sourcing, treatment, and recycling services to oil and gas operators in the Permian Basin, capitalizing on the industry's need for water management solutions. Partnerships with exploration and production companies and the strategic location of its land assets contribute significantly to TPL's earnings.

Texas Pacific Land Financial Statement Overview

Summary

Texas Pacific Land demonstrates strong financial health with excellent profitability, robust growth, and a solid balance sheet. Minimal debt, high equity, and strong cash flows position it well in the industry. Potential risks include revenue volatility due to industry fluctuations, but current metrics show resilience.

Income Statement

Very Positive

Texas Pacific Land has shown strong revenue growth from $631.6 million in 2023 to $705.8 million in 2024, a growth rate of 11.8%. The gross profit margin is excellent at 100%, indicating effective cost management. The net profit margin is robust at 64.3%, showing strong profitability. EBIT and EBITDA margins are also high at 76.4% and 85.6% respectively, showcasing strong operational efficiency.

Balance Sheet

Very Positive

The company's balance sheet is notably strong with a debt-to-equity ratio of practically zero due to minimal debt. Return on equity is impressive at 40.1%, reflecting efficient use of shareholder funds. The equity ratio is high at 90.7%, suggesting a stable financial foundation with a low level of liabilities.

Cash Flow

Very Positive

The free cash flow growth rate is substantial at 21.8%, indicating improved cash generation. The operating cash flow to net income ratio is 1.08, showing healthy cash flow relative to earnings. The free cash flow to net income ratio is 1.02, demonstrating efficient conversion of profits into cash.

Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Breakdown
Income Statement		Total Revenue
705.82M	631.60M	667.42M	450.96M	302.55M
	Gross Profit
634.54M	583.27M	634.53M	421.47M	269.95M
	EBIT
539.14M	486.05M	562.31M	362.39M	217.25M
	EBITDA
564.30M	500.81M	577.68M	378.65M	231.66M
	Net Income Common Stockholders
453.96M	405.64M	446.36M	269.98M	176.05M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
369.83M	725.17M	510.83M	428.24M	281.05M
	Total Assets
1.25B	1.16B	877.43M	764.06M	571.63M
	Total Debt
453.00K	1.17M	1.96M	1.45M	2.82M
	Net Debt
-369.38M	-724.00M	-508.88M	-426.80M	-278.23M
	Total Liabilities
115.56M	113.20M	104.54M	112.35M	86.45M
	Stockholders Equity
1.13B	1.04B	772.89M	651.71M	485.18M
Cash Flow		Free Cash Flow
65.40M	378.29M	426.27M	249.62M	185.00M
	Operating Cash Flow
490.67M	418.29M	447.15M	265.16M	207.04M
	Investing Cash Flow
-471.75M	-60.31M	-21.40M	-15.00M	-26.00M
	Financing Cash Flow
-378.09M	-144.61M	-336.81M	-104.95M	-201.66M

Texas Pacific Land Technical Analysis

Technical Analysis Sentiment

Positive

Last Price1370.71

Price Trends

50DMA

1312.35

Positive

100DMA

1314.92

Positive

200DMA

1192.56

Positive

Market Momentum

MACD

28.36

Negative

RSI

53.64

Neutral

STOCH

84.50

Negative

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TPL, the sentiment is Positive. The current price of 1370.71 is above the 20-day moving average (MA) of 1348.77, above the 50-day MA of 1312.35, and above the 200-day MA of 1192.56, indicating a bullish trend. The MACD of 28.36 indicates Negative momentum. The RSI at 53.64 is Neutral, neither overbought nor oversold. The STOCH value of 84.50 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for TPL.

Texas Pacific Land Peers Comparison

Overall Rating

UnderperformOutperform

Sector (57)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
DVN	78 Outperform	$20.99B	7.57	20.88%	3.82%	12.06%	-16.37%
TPL	76 Outperform	$32.65B	71.01	39.52%	0.39%	10.36%	6.37%
EQT	75 Outperform	$33.44B	96.33	2.06%	1.13%	39.56%	-59.84%
OXY	75 Outperform	$42.36B	17.42	9.43%	2.13%	1.35%	-33.30%
CTRA	72 Outperform	$18.70B	14.48	9.40%	3.47%	10.33%	-0.13%
FANG	72 Outperform	$40.71B	8.53	14.26%	4.46%	47.89%	-7.87%
Sector *	57 Neutral	$7.13B	3.45	-3.67%	5.68%	0.46%	-50.35%

* Energy Sector Average

Performance Comparison

TPL

Texas Pacific Land

1,370.71

764.12

125.97%

CTRA

Coterra Energy

24.88

-2.03

-7.54%

DVN

Devon Energy

32.17

-16.02

-33.24%

EQT

56.14

15.57

38.38%

OXY

Occidental Petroleum

41.90

-20.35

-32.69%

FANG

Diamondback

138.35

-52.23

-27.41%

Texas Pacific Land Earnings Call Summary

Earnings Call Date:May 07, 2025

(Q1-2025)

% Change Since: 2.03%|

Next Earnings Date:Jul 30, 2025

Earnings Call Sentiment Positive

The earnings call presented a largely positive outlook with record production levels and strong financial metrics. However, there are concerns about commodity price sensitivity and potential declines in Permian activity that could impact future performance. The company's strong financial position and strategic initiatives provide resilience against potential downturns.

Q1-2025 Updates

Positive Updates

Record Oil and Gas Royalty Production

TPL set a quarterly record with oil and gas royalty production averaging approximately 31,100 barrels of oil equivalent per day, representing 7% growth sequential quarter-over-quarter and 25% growth year-over-year.

Strong Water Segment Revenue

Water segment revenues totaled $69 million, showing a 3% sequential quarter-over-quarter growth and 11% growth year-over-year, driven by robust volume gains in water sales and produced water royalties.

High Adjusted EBITDA Margin

Consolidated adjusted EBITDA was $169 million with an adjusted EBITDA margin of 86.4%.

Robust Near-Term Well Inventory

TPL's near-term well inventory reached an all-time high with 24.3 net wells, which is 7% higher sequential quarter-over-quarter and 38% higher year-over-year.

Strong Financial Position

TPL maintains a net cash position with zero debt and $460 million in cash and cash equivalents.

Easement Renewal Payments

TPL anticipates benefiting from easement renewal payments with CPI escalators, expecting renewal payments of approximately $10 million in 2026, ramping up to $35 million per year in subsequent years.

Negative Updates

Commodity Price Sensitivity

TPL's oil and gas royalties are directly exposed to commodity prices, and a sustained oil price below $60 could result in a downturn in activity.

Potential Decline in Permian Activity

Feedback from operators indicates cautious evaluation of activity plans, and a potential decline in Permian activity could impact TPL's revenue streams.

Delayed Desalination Unit Launch

The Phase IIb desalination unit is now expected to come online by the end of the year, indicating a delay in its launch.

Company Guidance

During the Texas Pacific Land Corporation First Quarter 2025 Earnings Call, the company reported record performance in several key metrics. Oil and gas royalty production averaged approximately 31,100 barrels of oil equivalent per day, marking a 7% sequential increase and a 25% growth year-over-year. Water segment revenues reached $69 million, showing a 3% quarter-over-quarter growth and an 11% increase year-over-year. Consolidated revenues for the quarter were $196 million, with an adjusted EBITDA of $169 million and an impressive EBITDA margin of 86.4%. Free cash flow stood at $127 million, reflecting an 11% increase compared to the previous year. Additionally, the company highlighted a robust near-term well inventory, with 24.3 net wells, including 5.9 net permitted wells, 12.9 net drilled but uncompleted wells, and 5.4 net completed but not producing wells. Despite potential challenges from fluctuating oil prices, TPL emphasized its strong financial position, with a net cash position, zero debt, and $460 million in cash and cash equivalents as of March 31, 2025.

Texas Pacific Land Corporate Events

Financial Disclosures

Texas Pacific Land Reports Record Q1 2025 Results

Positive

May 7, 2025

On May 7, 2025, Texas Pacific Land Corporation announced its first-quarter 2025 financial results, highlighting record oil and gas royalty production and water services revenue. The company reported a net income of $120.7 million and total revenues of $196.0 million, driven by increased oil and gas royalty revenue and water sales. Despite economic volatility, TPL’s strong financial position and business model allow it to remain resilient and opportunistic.

Spark’s Take on TPL Stock

According to Spark, TipRanks’ AI Analyst, TPL is a Outperform.

Texas Pacific Land showcases a solid financial foundation with strong profitability and growth metrics, bolstered by a robust balance sheet and positive earnings call sentiment. However, technical indicators suggest moderate momentum, and valuation metrics indicate the stock may be overvalued. The overall score reflects the company’s strong position in the industry, tempered by relative valuation concerns.

To see Spark’s full report on TPL stock, click here.

Glossary

OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.

NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.

UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.