Pioneer Natural Resources Company (PXD) is a large independent oil and gas exploration and production company operating in the United States. The company’s operations include well stimulation and completion activities, such as hydraulic fracturing, and water distribution and disposal.
Following the coronavirus pandemic-induced market correction in the early 2020, the OPEC+ alliance implemented production cuts and several other actions to curb oil price volatility. Now, growing optimism around the vaccines and the hope they will speed up an end to the health crisis are driving a sharp rebound in the global oil demand. The 13th OPEC and non-OPEC Ministerial Meeting (ONOMM) held on January 5 reconfirmed the decision made at the 12th ONOMM to increase production by 0.5 mb/d beginning this this month to meet rising demand.
PXD has long viewed sustainability as a balance of economic growth, environmental stewardship, and social responsibility. Its emphasis is on developing natural resources in a manner that protects surrounding communities and preserves the environment. This has helped the stock gain 63.5% over the past nine months. This impressive performance combined with several other factors has helped PXD earn a “Buy” rating in our proprietary rating system.
Here is how our proprietary POWR Ratings system evaluates PXD:
Trade Grade: A
PXD is currently trading above its 50-day and 200-day moving averages of $113.31 and $98.78, respectively, indicating that the stock is in an uptrend. In fact, the stock’s 46.7% gains over the past three months reflect solid short-term bullishness.
PXD’ total revenues have increased 111.3% sequentially to $1.82 billion in the third quarter ended September 30, 2020. Its adjusted income has improved 148.1% year-over-year to $26 million over the same period.
In October , PXD entered into a definitive agreement to acquire Parsley Energy, Inc. for an all-stock transaction valued at approximately $4.50 billion. This transaction will further strengthen PXD’s leadership position in the upstream energy sector, providing stakeholders structural advantages including a lower cost of capital, economies of scale, and enhanced ESG capabilities.
On December 3, PXD published its 2020 Sustainability Report highlighting enhanced disclosures on air emissions, health, and safety metrics. PXD is formally adopting targets in its operations that include a 25% reduction in GHG intensity, 40% reduction in methane intensity and ending routine flaring by 2030. This shows the company’s dedication and focus on environmental, social and governance (ESG) programs.
Buy & Hold Grade: C
In terms of proximity to its 52-week high, which is a key factor that our Buy & Hold Grade considers , PXD’s positioning is not too favorable. The stock is currently trading 12.2% below its 52-week high of $149.55.
The company’s net revenue has grown at a CAGR of 21.1% over the past three years. However, its cash flows have remained low over the years due to aggressive spending on capital infrastructure.
Peer Grade: A
PXD is currently ranked #8 of 129 stocks in the Energy – Oil & Gas Industry. Other popular stocks in this industry are Exxon Mobil Corporation (XOM), Chevron Corporation (CVX) and ConocoPhillips (COP).
XON, CVX and COP gained 5.4%, 5.5% and 8.9%, respectively, over the past six months. This compares to PXD’s 35.9% returns over this period.
Industry Rank: D
The Energy – Oil & Gas Industry is ranked #104 of the 123 StockNews.com industries. The companies in this industry are focused on exploring and producing crude oil and natural gas worldwide for residential, industrial, and transportation uses.
The outbreak of the pandemic triggered a major collapse in oil prices, intensified by a short-lived yet aggressive Saudi Arabia-Russia price war. This forced crude oil prices to turn negative for the first time in history in April last year.
While the situation has improved since then, the ongoing clean energy drive is expected to curb the sector’s recovery. Major economies around the world have announced their pledges to carbon neutrality. Moreover, with President-elect Joe Biden coming to be inaugurated this month, the industry’s recovery prospects look bleak based on Biden’s commitment to carbon-emissions reduction.
Overall POWR Rating: B (Buy)
PXD is rated “Buy” due to its impressive past performance and short-term bullishness, as determined by the four components of our overall POWR Rating.
Despite gaining more than 35% over the past six months, PXD has the potential to grow further based on its continued business growth, and favorable earnings and revenue outlook.
Analyst sentiment, which gives a good sense of a stock’s future price movement, is good for PXD. An average broker rating of 1.33 indicates a favorable analyst sentiment. Of29 Wall Street Analysts that rated the stock, 11 rated it “Strong Buy.”
Analysts expect PXD’s revenues to rise 21% year-over-year to $1.32 billion in the current quarter ending March 31, 2021. The consensus EPS estimate $1.25 for the current quarter indicates an 8.7% rise from the year-ago value. The company has an impressive earnings surprise history; it beat the Street EPS estimates in three of the trailing four quarters. This outlook should keep PXD’s price momentum alive in the near term.
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PXD shares were unchanged in after-hours trading Monday. Year-to-date, PXD has gained 15.39%, versus a 1.29% rise in the benchmark S&P 500 index during the same period.
About the Author: Rishab Dugar
Rishab is a financial journalist and investment analyst. His investment approach is to focus on quality stocks, trading at low prices, with business models that he readily understands. More...
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