Diversified Energy Company (DEC)
NYSE:DEC
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Diversified Energy Company
(NYSE:DEC)
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Rating:72Outperform
Price Target:
$17.50
▲(15.06% Upside)
Action:ReiteratedDate:03/26/26
The score is driven by improved—but still uneven—financial performance, complemented by a very attractive valuation (low P/E and high yield). Technicals support an uptrend, though momentum looks stretched (RSI/Stoch), and the earnings call was constructive on cash flow, deleveraging, and accretive M&A while still acknowledging meaningful leverage and execution risks.
Positive Factors
Free cash flow generation
Material adjusted free cash flow ($440M in 2025) creates durable internal funding for debt paydown, maintenance capex, and shareholder returns. Sustained FCF supports deleveraging targets and incremental bolt‑on M&A without full reliance on external funding, strengthening long‑term flexibility.
Negative Factors
Volatile earnings and cash conversion
Large multi‑year swings (loss years and outsized profits) and weaker cash conversion (FCF below net income; operating cash covers a fraction of EBIT) reduce predictability. This volatility complicates sustainable payout policies, deleveraging plans and long‑term capital allocation decisions.
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Positive Factors
Negative Factors
Free cash flow generation
Material adjusted free cash flow ($440M in 2025) creates durable internal funding for debt paydown, maintenance capex, and shareholder returns. Sustained FCF supports deleveraging targets and incremental bolt‑on M&A without full reliance on external funding, strengthening long‑term flexibility.
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Diversified Energy Company (DEC) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$1.21B
Dividend Yield8.02%
Average Volume (3M)581.80K
Price to Earnings (P/E)0.7
Beta (1Y)0.34
Revenue GrowthN/A
EPS GrowthN/A
CountryUS
Employees1,589
SectorEnergy
Sector Strength52
IndustryOil & Gas Energy
Share Statistics
EPS (TTM)4.67
Shares Outstanding72,350,750
10 Day Avg. Volume541,211
30 Day Avg. Volume581,802
Financial Highlights & Ratios
PEG Ratio>-0.01
Price to Book (P/B)1.07
Price to Sales (P/S)0.66
P/FCF Ratio3.77
Enterprise Value/Market Cap1.24
Enterprise Value/Revenue0.93
Enterprise Value/Gross Profit3.65
Enterprise Value/Ebitda1.63
Forecast
1Y Price Target
$22.80Price Target Upside49.90% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering6
EPS Forecast (FY)1.7
Revenue Forecast (FY)$1.99B
Diversified Energy Company Business Overview & Revenue Model
Company Description
Diversified Energy Company PLC operates as an independent owner and operator of producing natural gas and oil wells primarily in the Appalachian Basin of the United States. The company is involved in the production, marketing, and transportation o...
How the Company Makes Money
DEC primarily makes money by producing and selling natural gas, natural gas liquids (NGLs), and oil from its operated and non-operated wells. Revenue is generated through sales of these commodities to purchasers under various marketing arrangement...
Diversified Energy Company Earnings Call Summary
Earnings Call Date:Feb 26, 2026
(Q4-2025)
| % Change Since: |
Next Earnings Date:May 06, 2026
Earnings Call Sentiment Positive
The call presented a largely positive picture: record adjusted EBITDA ($956M), strong free cash flow ($440M), material production growth (exit ~1.25 Bcfe/day), successful POP monetizations (~$160–170M in 2025), and continued accretive M&A including the Sheridan bolt-on. The balance sheet has improved (leverage down to 2.3x) and liquidity (~$577M) supports near-term transactions. Key risks include a still-elevated net debt load (~$2.8B), $55M of transaction costs that reduced FCF, dependence on continued successful M&A/integration and variability in POP proceeds, along with broader commodity volatility. Overall, the positives and execution accomplishments significantly outweigh the risks discussed on the call.Positive Updates
Record Adjusted EBITDA and Strong Margins
Total revenue of $1.83 billion and record adjusted EBITDA of $956 million for FY2025, with an adjusted EBITDA margin of 58% (beat guidance).
Negative Updates
Elevated Net Debt and Ongoing Leverage
Net debt remains substantial at ~ $2.8 billion despite improvement; company is targeting a 2.0–2.5x net debt/EBITDA range (currently 2.3x), indicating continued leverage risk and reliance on deleveraging execution.
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Q4-2025 Updates
Positive
Negative
Record Adjusted EBITDA and Strong Margins
Total revenue of $1.83 billion and record adjusted EBITDA of $956 million for FY2025, with an adjusted EBITDA margin of 58% (beat guidance).
Read all positive updates
Company Guidance
The company said it has published full‑year 2026 guidance (prepared on the same metrics as 2025) but noted that the newly announced Sheridan Production acquisition is not included; management explicitly said portfolio‑optimization (POP) cash proceeds of roughly $100 million are expected to be included in 2026 adjusted EBITDA and adjusted free cash flow. For context, 2025 results (which beat guidance) were: total revenue $1.83 billion, adjusted EBITDA $956 million (58% margin), adjusted free cash flow $440 million (after ~$55 million of transaction costs), average production ~1.1 Bcfe/d with a December exit rate of ~1.25 Bcfe/d, net debt ~ $2.8 billion and leverage down to ~2.3x. Looking into 2026, management reiterated a net debt/EBITDA target range of 2.0–2.5x (and expects to continue repaying roughly $300 million of debt annually), confirmed liquidity of about $577 million to fund deals, and highlighted non‑op programs that should help offset declines (non‑op production expected to exit 2026 just over 12,500 BOE/d). Separately the Sheridan deal (expected to close in Q2 2026 and not in guidance) would add ~61 MMcfe/d, ~397 Bcfe of estimated reserves and an expected ~ $52 million of next‑12‑month EBITDA for a ~$245 million purchase price.Diversified Energy Company Financial Statement Overview
Summary
Income Statement
58
Neutral
Balance Sheet
67
Positive
Cash Flow
62
Positive
| Breakdown | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|
Income Statement | |||||
| Total Revenue | 1.61B | 794.84M | 868.26M | 1.92B | 977.04M |
| Gross Profit | 411.59M | 109.45M | 203.16M | 1.25B | 515.35M |
| EBITDA | 923.82M | 170.18M | 1.36B | -476.50M | -332.69M |
| Net Income | 341.90M | -88.27M | 758.02M | -625.41M | -325.21M |
Balance Sheet | |||||
| Total Assets | 6.17B | 4.00B | 3.47B | 3.83B | 3.49B |
| Cash, Cash Equivalents and Short-Term Investments | 29.70M | 5.99M | 3.75M | 7.33M | 12.56M |
| Total Debt | 236.55M | 1.74B | 1.31B | 1.47B | 1.04B |
| Total Liabilities | 5.17B | 3.54B | 2.88B | 3.97B | 2.83B |
| Stockholders Equity | 984.06M | 452.68M | 585.81M | -152.69M | 647.41M |
Cash Flow | |||||
| Free Cash Flow | 280.02M | 293.56M | 335.88M | 301.69M | 270.01M |
| Operating Cash Flow | 464.62M | 345.66M | 410.13M | 387.76M | 320.18M |
| Investing Cash Flow | -820.17M | -272.92M | -239.37M | -386.46M | -625.87M |
| Financing Cash Flow | 448.40M | -70.51M | -174.34M | -6.54M | 316.87M |
Diversified Energy Company Peers Comparison
UnderperformOutperform
Sector (65)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
84 Outperform | $1.31B | 15.63 | 17.61% | 12.53% | -5.38% | -46.73% | |
76 Outperform | $1.91B | 12.28 | 12.05% | 13.84% | 3.57% | ― | |
72 Outperform | $1.21B | 0.70 | 40.22% | 8.02% | ― | ― | |
65 Neutral | $15.17B | 7.61 | 4.09% | 5.20% | 3.87% | -62.32% | |
54 Neutral | $2.84B | -1.38 | -29.09% | 8.18% | -6.81% | -197.47% | |
| ― | $212.07M | -576.09 | -20.86% | ― | -99.83% | -107.50% | |
| ― | $1.14B | 19.59 | 944.35% | 7.51% | -6.78% | -7.78% |
* Energy Sector Average
DEC
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Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.