Have Investors Already Priced In CVR Refining LP’s (NYSE: CVRR) Growth?

in INVESTING IDEAS by

CVR Refining LP (NYSE: CVRR), an energy company with a market capitalization of $2.5 billion, saw its share price increase by 31.8% over the last month. As a mid-cap stock with decent coverage by analysts, you could assume any recent changes in the company’s outlook is already priced into the stock. However, could shares still be trading at a relatively cheap price? Let’s take a look at CVR Refining’s outlook and value based on its most recent financial data to see if there are any catalysts for a price change.


What Is CVR Refining Worth?

Welcoming news for investors, CVR Refining is still trading at a fairly cheap price. According to our 7 valuation analyses, the intrinsic value for the stock is $19.82 per share and is currently trading at $17.55 in the market. This means that there is still an opportunity to buy now.

CVR Refining LP Valuation Detail
Analysis Model Fair Value Upside (Downside)
10-yr DCF EBITDA Exit $23.66 34.8%
5-yr DCF EBITDA Exit $25.25 43.9%
Peer EBITDA Multiples $18.90 7.7%
10-yr DCF Growth Exit $20.62 17.5%
5-yr DCF Growth Exit $20.36 16.0%
Peer P/E Multiples $17.41 -0.8%
Earnings Power Value $12.51 -28.7%
Average $19.82 12.9%

Click on any of the analyses above to view the latest model with real-time data.

What’s more interesting is that CVR Refining’s share price is quite volatile, which gives us more chances to buy since the share price could sink lower (or rise higher) in the future. This is based on its high beta, which is a good indicator for how much the stock moves relative to the rest of the market.


How Much Growth Will CVR Refining Generate?

Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company’s future expectations.

CVR Refining projected ebitda chartsource: finbox.io data explorer

With CVR Refining’s relatively muted EBITDA growth of 6.4% expected over the next five years on average, growth doesn’t seem like a key catalyst for a buying decision, at least in the short to medium-term.


Next Steps

While many investors tend to categorize stocks as either value or growth plays, the most successful investors view growth in conjunction with a company’s value. Take legendary investor Peter Lynch for example, who is widely known for popularizing the term growth at a reasonable price (GARP).

GARP is a strategy that combines aspects of both growth and value investing techniques by finding high growth companies that don’t trade at overly high valuations. In the application of this strategy, Lynch achieved 29% annualized returns as the manager of Fidelity’s Magellan Fund from 1977 to 1990. Needless to say the importance of analyzing a company’s fair value in addition to its growth prospects.

Although CVR Refining’s future growth is relatively low, the company’s stock still appears to be trading at a discount to its intrinsic value. Therefore, it may be a great time to purchase shares or add more to your existing holdings.

However, if you have not done so already, I highly recommend you complete your research on CVR Refining by taking a look at the following:

Efficiency Metrics: fixed asset turnover is calculated by dividing revenue by average fixed assets. View CVR Refining’s fixed asset turnover here.

Risk Metrics: how much interest coverage does CVR Refining have? This is a ratio used to assess a firm’s ability to pay interest expenses based on operating profits (EBIT). View the company’s interest coverage here.

Valuation Metrics: what is CVR Refining’s short ratio and how does it compare to its publicly traded peers? It represents the percentage of total shares outstanding that is being shorted. View the short ratio here.

As of this writing, I did not hold a position in any of the aforementioned securities and this is not a buy or sell recommendation on any security mentioned.

Expertise: financial technology, analyzing market trends. Brian is a founder at finbox.io, where he’s focused on building tools that make it faster and easier for investors to research stock fundamentals. Brian’s background is in physics & computer science and previously worked as a software engineer at GE Healthcare. He enjoys applying his expertise in technology to help find market trends that impact investors. Brian can be reached at brian@finbox.io or at +1 (516) 778-6257.

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