EPM
Evolution Petroleum Corporation
$3.80
Oil & Gas E&P
85%
FCF at Price Deck × Multiple
Moderate
·
Conviction
Overvalued
Trading 30.0% above fair value
You pay
$3.80
Bear
$0.94
Fair
$2.92
Bull
$5.57
Bear
$0.94
-75.4%
FCF $8M × 8x
Fair
$2.92
-23.1%
FCF $11M × 11x
Bull
$5.57
+46.6%
FCF $15M × 14x
Key Value Driver
Oil price assumption ($75/bbl base case)
Implied Market Multiple
15.0x
Summary
Our base-case estimate uses a valuation based on free cash flow under different commodity price assumptions and a valuation multiple. We then blend that result with the average analyst price target of $4.50 from 9 analysts, using a 20% weight on analyst consensus. That produces an estimated intrinsic value of $2.92 per share.
Warnings
If oil drops to $60/barrel, the stock could fall -79%. Check whether the company can survive at low prices and still pay its dividend.
Where you think oil prices will settle long-term drives over 80% of this valuation. The biggest risk isn't the company itself — it's getting the commodity price wrong.
Wall Street's average price target is $4.50 (from 9 analysts). Our estimate is 44% below the consensus -- consider that gap carefully.
Key Risks
- Growth DCF inappropriate — commodity volumes do not compound
- Geopolitical premiums are real but historically temporary
- Reserve replacement ratio below 100% for 3 years is existential