Is TALO a high-quality business?

AlphaMadera's AlphaQuality grade scores Talos Energy Inc. on six pillars — profitability, capital efficiency, balance-sheet strength, growth durability, cash generation, and shareholder yield. The composite letter grade reflects how TALO compares to a Buffett-style quality bar.

What is Talos Energy Inc.'s AlphaQuality grade?

AlphaQuality assigns a letter grade (A through F) to TALO based on a six-pillar quantitative model. The live page shows the composite grade plus each pillar's individual score with the underlying metrics.

What makes TALO a quality stock?

AlphaQuality looks at return on capital, free-cash-flow margins, debt-to-equity, revenue stability, dividend and buyback policy, and operating-margin trend. Stocks scoring well across all six pillars earn higher grades — the methodology favors compounders over cyclicals.

TALO - Talos Energy Inc.

Price: -- -- | CONSENSUS: Buy DETAILS | PRICE TARGET: $15.25 DETAILS

AlphaQuality

Quantitative six-pillar business-quality grade

Oil & Gas E&P

AlphaQuality — archetype-weighted quantitative grade

D 37.4 / 100 composite

Composite Grade

Composite of six pillars weighted for oil & gas e&p businesses. Purely quantitative — no stock price or analyst input.

Profitability

Weight: 15%

F 13.8

5yr Avg ROIC 1.9% 20/100
Operating Margin Trend -10.79 pp/yr 0/100

Capital Efficiency

Weight: 10%

F 4.3

5yr Avg ROE -1.7% 7/100
5yr Share-Count CAGR 21.0% 0/100

Growth Quality

Weight: 5%

C- 47.3

5yr Revenue CAGR 9.4% 78/100
5yr EPS CAGR -66.0% 0/100
Revenue-Growth Years (5) 3/5 60/100

Cash Generation

Weight: 25%

B- 62.7

5yr FCF Margin 15.7% 83/100
5yr FCF/NI Conversion 0.39x 38/100

Balance Sheet

Weight: 25%

D 38.0

Net Debt / EBITDA 1.19x 82/100
Interest Coverage (EBIT/Int) -2.70x 0/100
Altman Z-Score 0.28 4/100

Stability

Weight: 20%

D 36.3

EPS Volatility (σ/μ) 0.65 18/100
Piotroski F-Score 4 44/100
Negative-Revenue Years (5) 2/5 60/100

3 of 3 gurus held; 1 new buy; 2 trimmed; 1 full exit.

Holders: 3
Avg Δ position: -9.4%
New buys: 1
Full exits: 1

Laffont new
Wood sold -100%
Greenblatt decreased -17%

How this is calculated

AlphaQuality grades six pillars from 0-100 and weights each by archetype:

Profitability (15%) — 5yr Avg ROIC, Operating Margin Trend
Capital Efficiency (10%) — 5yr Avg ROE, 5yr Share-Count CAGR
Growth Quality (5%) — 5yr Revenue CAGR, 5yr EPS CAGR, Revenue-Growth Years (5)
Cash Generation (25%) — 5yr FCF Margin, 5yr FCF/NI Conversion
Balance Sheet (25%) — Net Debt / EBITDA, Interest Coverage (EBIT/Int), Altman Z-Score
Stability (20%) — EPS Volatility (σ/μ), Piotroski F-Score, Negative-Revenue Years (5)

We deliberately ignore stock price, analyst targets, and consensus ratings so the grade is suitable for backtesting forward returns. A minimum of 5 fiscal years of audited statements is required; distressed and highly leveraged infrastructure businesses are declared ungradable rather than forced into a numeric score.