Too Late To Buy Carrizo Oil & Gas Inc (NASDAQ: CRZO)?

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Carrizo Oil & Gas Inc (NASDAQ: CRZO), an energy company with a market capitalization of $2.1 billion, saw its share price increase by 37.6% over the last month. As a mid-cap stock with high 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 Carrizo’s outlook and value based on its most recent financial data to see if there are any catalysts for a price change.


What’s The Opportunity In Carrizo?

Welcoming news for investors, Carrizo is still trading at a fairly cheap price. According to our 6 valuation analyses, the intrinsic value for the stock is $34.88 per share and is currently trading at $23.50 in the market. This means that there is still an opportunity to buy now.

Carrizo Oil & Gas Inc Valuation Detail
Analysis Model Fair Value Upside (Downside)
10-yr DCF Revenue Exit $36.29 54.4%
5-yr DCF Revenue Exit $37.92 61.3%
Peer Revenue Multiples $30.34 29.1%
10-yr DCF Growth Exit $37.23 58.4%
5-yr DCF Growth Exit $36.27 54.3%
Peer P/E Multiples $31.26 33.0%
Average $34.88 48.4%

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

What’s more interesting is that Carrizo’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.


Can We Expect Growth From Carrizo?

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. Although value investors would argue that it’s the intrinsic value relative to the price that matters the most, a more compelling investment thesis would be high growth potential at a cheap price.

Carrizo projected net income chartsource: finbox.io data explorer

With net income expected to grow at an average rate of 44.0% over the next couple years, the future certainly appears bright for Carrizo. It looks like higher cash flows are in the cards for shareholders, which should feed into a higher stock valuation.


What This Means For Investors

Growth investors typically look to invest in companies that are expanding sales, gaining market share and building customer bases. On the other hand, value investors often argue that the most successful investments are in companies that deliver the highest cash flows while trading at the lowest valuation.

But why not put those hands together? A company that has both growth and value characteristics would certainly make the most attractive investment. So what did we find out about Carrizo?

Carrizo’s optimistic future growth does not appear to have been fully factored into the current share price with the stock still trading below its intrinsic value. Therefore, it may be a good time to purchase shares or increase your position in the company.

It is important to note that there are a variety of other fundamental factors that I have not taken into consideration in this article. If you have not done so already, I highly recommend that you complete your research on Carrizo by taking a look at the following:

Valuation Metrics: what is Carrizo’s price to book ratio and how does it compare to its peers? Analyze Price / Book here.

Risk Metrics: what is Carrizo’s CapEx coverage? This is the amount a company outlays for capital assets for each dollar it generates from those investments. View the company’s CapEx coverage here.

Efficiency Metrics: inventory turnover is a ratio that measures the number of times a company’s inventory is sold and replaced over the year. View Carrizo’s inventory turnover 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 modeling, mergers & acquisitions. Andy is also a founder at finbox.io, where he’s focused on building tools that make it faster and easier for investors to do investment research. Andy’s background is in investment banking where he led the analysis on over 50 board advisory engagements involving mergers and acquisitions, fairness opinions and solvency opinions. Some of his board advisory highlights: - Sears Holdings Corp.’s $620 mm spin-off via rights offering of Sears Outlet, Hometown Stores and Sears Hardware Stores. - Cerberus Capital Management’s $3.3 bn acquisition of SUPERVALU Inc.’s New Albertsons, Inc. assets. Andy can be reached at andy@finbox.io or at +1 (516) 778-6257.

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