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Viper Energy (VNOM)
NASDAQ:VNOM
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Viper Energy
(NASDAQ:VNOM)
77Outperform
Positive Factors
Growth Potential
VNOM's unique relationship with FANG provides access to high-quality royalty interests, enhancing production visibility and cash flow stability.
Market Position
Viper's market cap has surpassed the $10 billion threshold, elevating it from small to mid-cap E&Ps.
Strategic Acquisitions
The acquisition of Endeavor and Quinn Ranch royalties provides transformative scale for Viper Energy.
Negative Factors
Valuation Concerns
The absolute value of the deal was higher than estimated, resulting in a more expensive transaction and a lowered price objective.
Valuation Relative to Peers
VNOM's strong growth outlook warrants a premium valuation, yet shares trade in line with royalty peer group median.
Viper Energy (VNOM) vs. S&P 500 (SPY)
Market Cap
$9.36B
Dividend Yield6.05%
Average Volume (3M)1.30M
Price to Earnings (P/E)11.3
Beta (1Y)0.59
Revenue Growth17.40%
EPS Growth39.33%
CountryUS
EmployeesN/A
SectorEnergy
Sector Strength55
IndustryOil & Gas Midstream
Share Statistics
EPS (TTM)0.54
Shares Outstanding131,083,710
10 Day Avg. Volume1,164,614
30 Day Avg. Volume1,299,953
Financial Highlights & Ratios
PEG Ratio3.44
Price to Book (P/B)1.78
Price to Sales (P/S)0.00
P/FCF Ratio290.38
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$53.36Price Target Upside29.77% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering12
Viper Energy Business Overview & Revenue Model
Company DescriptionViper Energy Partners LP owns, acquires, and exploits oil and natural gas properties in North America. As of December 31, 2021, it had mineral interests in 27,027 net royalty acres in the Permian Basin and Eagle Ford Shale; and estimated proved oil and natural gas reserves of 127,888 thousand barrels of crude oil equivalent. Viper Energy Partners GP LLC operates as the general partner of the company. The company was founded in 2013 and is based in Midland, Texas. Viper Energy Partners LP is a subsidiary of Diamondback Energy, Inc.
How the Company Makes MoneyViper Energy generates revenue primarily through its ownership of mineral rights and royalty interests in oil and natural gas properties. The company earns money by receiving a percentage of the revenue from the sale of oil and gas extracted by operators who develop and produce on the land where Viper holds these interests. Key revenue streams include lease bonuses, which are upfront payments received when mineral rights are leased to operators, and ongoing royalty payments based on the production volume and commodity prices. Viper Energy's earnings are significantly influenced by factors such as production levels, market prices for oil and gas, and strategic acquisitions of additional mineral interests. The company also benefits from partnerships with major oil and gas operators who have the expertise and resources to efficiently extract hydrocarbons from its properties.
Viper Energy Financial Statement Overview
Summary
Viper Energy shows strong financial health with robust profitability margins and a solid balance sheet, highlighted by the absence of debt. Cash flow metrics are positive, reflecting good liquidity management. However, the decline in revenue growth is a concern.Income Statement
Viper Energy shows a strong income statement with robust gross and net profit margins in the TTM. The gross profit margin is approximately 66.5% and net profit margin is 57.1%, indicating efficient cost management. However, the revenue has decreased from 2023 to TTM by 23.9%, which is a concern. The company maintains a strong EBIT margin of 67.1% and EBITDA margin of 91.9% in the TTM.85
Very Positive
Balance Sheet
The balance sheet reveals a strong equity position with a debt-to-equity ratio of 0, reflecting no debt in the TTM. The return on equity is impressive at 21.3%, indicating effective utilization of shareholders' equity. The equity ratio stands at 33.3%, showing a healthy balance between debt and equity.78
Positive
Cash Flow
Cash flow analysis indicates a positive trajectory with free cash flow improving significantly to $348.6 million in TTM from a negative position in 2023. The operating cash flow to net income ratio is 1.7, reflecting good cash generation relative to net income. The free cash flow to net income ratio is 0.97, suggesting efficient conversion of profits into free cash flow.82
Very Positive
| Breakdown | |||||
| TTM | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|---|
| Income Statement | Total Revenue | ||||
| 893.51M | 853.58M | 826.79M | 865.77M | 504.30M | 249.57M | Gross Profit |
| 595.55M | 578.28M | 630.27M | 688.32M | 368.75M | 129.22M | EBIT |
| 581.25M | 566.40M | 620.22M | 680.48M | 361.57M | 123.40M | EBITDA |
| 884.36M | 794.25M | 742.32M | 783.41M | 395.15M | 82.55M | Net Income Common Stockholders |
| 390.88M | 359.25M | 200.09M | 655.00M | 256.68M | -193.41M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | ||||
| 560.00M | 26.85M | 25.87M | 18.18M | 39.45M | 19.12M | Total Assets |
| 6.24B | 5.07B | 3.97B | 2.92B | 3.03B | 2.46B | Total Debt |
| 0.00 | 1.08B | 1.08B | 576.89M | 776.73M | 555.64M | Net Debt |
| -560.00M | 1.06B | 1.06B | 558.72M | 737.28M | 536.52M | Total Liabilities |
| 915.00M | 1.16B | 1.12B | 598.85M | 801.19M | 600.54M | Stockholders Equity |
| 2.67B | 1.69B | 1.01B | 690.66M | 814.82M | 635.25M |
| Cash Flow | Free Cash Flow | ||||
| 29.70M | -76.63M | -270.17M | 636.87M | 25.94M | 130.88M | Operating Cash Flow |
| 705.17M | 619.61M | 638.19M | 699.80M | 307.11M | 196.56M | Investing Cash Flow |
| -1.07B | -608.57M | -908.37M | 47.57M | -281.18M | -16.28M | Financing Cash Flow |
| 908.91M | -10.05M | 277.86M | -768.64M | -5.61M | -164.75M |
Viper Energy Technical Analysis
Neutral
41.12
Price Trends
41.07
Positive
44.09
Negative
45.70
Negative
Market Momentum
0.18
Negative
52.04
Neutral
55.35
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For VNOM, the sentiment is Neutral. The current price of 41.12 is above the 20-day moving average (MA) of 40.69, above the 50-day MA of 41.07, and below the 200-day MA of 45.70, indicating a neutral trend. The MACD of 0.18 indicates Negative momentum. The RSI at 52.04 is Neutral, neither overbought nor oversold. The STOCH value of 55.35 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for VNOM.
Viper Energy Peers Comparison
Overall Rating
UnderperformOutperform
Sector (56)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
78 Outperform | $8.90B | 21.61 | 19.71% | 4.84% | 5.03% | 7.15% | |
78 Outperform | $10.43B | 28.06 | 8.29% | 2.95% | 10.83% | -10.47% | |
77 Outperform | $9.36B | 11.25 | 20.80% | 6.05% | 17.40% | 39.33% | |
77 Outperform | $15.20B | 11.92 | 39.79% | 10.97% | 11.48% | -5.67% | |
76 Outperform | $8.37B | 15.26 | 49.74% | 6.97% | 8.77% | 15.22% | |
57 Neutral | $7.36B | 49.64 | -8.21% | 6.63% | 23.42% | -61.22% | |
56 Neutral | $7.25B | 3.36 | -3.66% | 5.65% | 0.66% | -50.71% |
* Energy Sector Average
Performance Comparison
VNOM
Viper Energy
41.36
5.68
15.92%
WES
Western Midstream Partners
39.64
4.05
11.38%
AM
Antero Midstream
18.85
4.77
33.88%
HESM
Hess Midstream Partners
38.88
5.99
18.21%
KNTK
Kinetik
45.36
7.42
19.56%
DTM
DT Midstream
103.97
39.48
61.22%
Viper Energy Earnings Call Summary
Earnings Call Date:May 05, 2025
(Q1-2025)
| % Change Since: 0.64%|
Next Earnings Date:Aug 04, 2025
Earnings Call Sentiment Neutral
The earnings call reflected a balanced sentiment with strong production performance and strategic transactions positioning Viper well, despite challenges posed by market volatility and lower commodity prices. The company remains optimistic about leveraging its strong balance sheet and investment-grade status to navigate the current environment.Q1-2025 Updates
Positive Updates
Strong Q1 Production
Oil and total production exceeded the high end of the guidance ranges for the first quarter of 2025.
Transformative Drop-Down Transaction
The transformative transaction between Viper and Diamondback closed on May 1, 2025, positioning Viper well despite market volatility.
Investment Grade Upgrade
Viper was upgraded to investment grade by Fitch, enhancing its access to capital and financial stability.
Opportunistic Share Repurchases
Viper took advantage of market volatility to repurchase shares, demonstrating confidence in its long-term strategy.
Negative Updates
Commodity Price Volatility
Since the end of the first quarter, there has been a period of lower commodity prices and significant market volatility affecting the industry.
Lower Q1 Dividend
The Q1 dividend was $0.57, approximately $0.07 lower than it would have been due to the timing of the drop-down transaction closing.
Potential Impact of Sustained Low Oil Prices
There is concern that sustained sub-$50 oil prices could lead to reduced activity levels and potential impact on Viper's production and financials.
Company Guidance
During the first quarter of 2025, Viper Energy reported higher-than-expected oil and total production, surpassing the high end of their guidance ranges. Despite entering a period of lower commodity prices and significant market volatility, Viper Energy is confident in its financial resilience due to its high free cash flow margins and high-quality assets. The company recently completed a transformative drop-down transaction with Diamondback, which closed on May 1, 2025, and is expected to maintain leverage below one times even in a sustained $50 per barrel WTI environment. Viper issued approximately 28 million shares in January to fund the transaction, resulting in net proceeds of roughly $1.3 billion, but did not receive any production or cash flow from the acquired assets during the quarter. Consequently, their Q1 dividend was $0.57 per share, approximately $0.07 lower than it would have been otherwise. The company chose to retain around $25 million of incremental capital for future allocation decisions. Despite potential sustained weakness in commodity prices, Viper expects its production to remain durable and is maintaining its guidance for oil production for the latter half of 2025.Viper Energy Corporate Events
M&A TransactionsBusiness Operations and Strategy
Viper Energy Completes Major Acquisition from Diamondback
Positive
May 5, 2025
On May 1, 2025, Viper Energy, Inc. and its subsidiary completed the acquisition of mineral and royalty interests from Diamondback Energy, Inc. for $1 billion in cash and equity issuance. This transaction, known as the ‘Drop Down,’ adds approximately 22,847 net royalty acres in the Permian Basin to Viper’s portfolio, with Diamondback operating 69% of these interests. The acquisition was funded through a public offering and credit facility, and it was approved by Viper’s board and stockholders, enhancing Viper’s strategic position in the oil and gas industry.
Spark’s Take on VNOM Stock
According to Spark, TipRanks’ AI Analyst, VNOM is a Outperform.
Viper Energy’s overall stock score reflects its strong financial health and robust profitability margins, supported by strategic corporate events and a solid dividend yield. However, technical analysis indicates a bearish trend, and revenue growth concerns remain. The stock’s undervaluation and strategic growth initiatives, as highlighted in the earnings call, are positive, but market volatility presents a risk.
To see Spark’s full report on VNOM stock, click here.
Executive/Board ChangesBusiness Operations and Strategy
Viper Energy Announces Leadership Transition with New CEO
Neutral
Feb 20, 2025
On February 20, 2025, Viper Energy, Inc. announced a leadership transition with the immediate departure of Travis D. Stice from the CEO role, while he remains on the Board of Directors. Kaes Van’t Hof, previously President, has taken over as CEO, and Austen Gilfillian has been promoted to President. This restructuring is part of a strategic succession planning process aimed at fostering long-term growth and maintaining Viper’s leadership in the mineral and royalties market. The changes are designed to ensure continued outperformance and capitalize on Viper’s unique business model and strategic relationship with Diamondback Energy.
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.