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Diversified Energy Company (DEC)
NYSE:DEC
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Diversified Energy Company
(NYSE:DEC)
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Rating:62Neutral
Price Target:
$14.00
▲(4.56% Upside)
The score is supported by strong cash generation and a very positive earnings-call update (record EBITDA/FCF, debt reduction, and large shareholder returns). Offsetting this is weaker reported profitability and a highly leveraged capital structure, while technicals are moderately constructive and valuation is helped by the high dividend but constrained by negative earnings.
Positive Factors
Free Cash Flow Strength
Consistent and rising free cash flow (~$294M in 2024, +84.7% YoY) provides durable internal funding for maintenance capex, workovers, debt service and shareholder returns. This reduces reliance on external financing across commodity cycles and supports operational resilience.
Executed Debt Reduction
Execution of ~ $203M debt paydown and a 20% improvement in leverage toward a 2x–2.5x net debt/EBITDA range materially increases financial flexibility. Lower leverage reduces refinancing and interest risk and creates structural room for capex, M&A, and shareholder returns.
Acquisition-Driven Scale
Strategic acquisitions (Maverick, Canvas) scaled production and cash flows in the core Appalachian footprint. Greater operational density improves per-well economics, creates synergies in field operations and optimization programs, and enhances durable cash-generation capacity.
Negative Factors
High Leverage and Capital Structure Risk
Debt-to-equity of 3.84 and roughly $1.74B of debt versus ~$0.45B equity represent structurally elevated leverage. This increases vulnerability to commodity price swings and interest-rate moves, constrains strategic flexibility, and heightens refinancing and covenant risks over the medium term.
Deteriorating Reported Profitability
Despite revenue growth, 2024 net margin was -11.1% and operating profit turned negative, revealing structural margin pressure. Persistent weak reported profitability can erode retained earnings, strain dividend sustainability, and force reliance on asset sales or higher leverage to fund obligations.
Asset Retirement & Environmental Obligations
Business focused on mature, late-life wells creates recurring plugging, abandonment and environmental compliance obligations. These long-term liabilities require cash and assurance mechanisms; regulatory tightening or cost inflation could materially increase future cash needs and reduce free cash available for growth.
Diversified Energy Company (DEC) vs. SPDR S&P 500 ETF (SPY)
Market Cap
£1.07B
Dividend Yield8.02%
Average Volume (3M)581.80K
Price to Earnings (P/E)―
Beta (1Y)0.62
Revenue GrowthN/A
EPS GrowthN/A
CountryUS
Employees1,589
SectorEnergy
Sector Strength52
IndustryOil & Gas Energy
Share Statistics
EPS (TTM)2.10
Shares Outstanding80,445,790
10 Day Avg. Volume541,211
30 Day Avg. Volume581,802
Financial Highlights & Ratios
PEG Ratio0.08
Price to Book (P/B)1.75
Price to Sales (P/S)1.00
P/FCF Ratio2.70
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
£25.01Price Target Upside86.79% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering8
EPS Forecast (FY)N/A
Revenue Forecast (FY)N/A
Diversified Energy Company Business Overview & Revenue Model
Company DescriptionDiversified 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 of natural gas, natural gas liquids, crude oil, and condensates. Its assets consist of natural gas wells and gathering systems located in the states of Tennessee, Kentucky, Virginia, West Virginia, Ohio, Pennsylvania, Oklahoma, Texas, and Louisiana. The company was formerly known as Diversified Gas & Oil PLC and changed its name to Diversified Energy Company PLC in May 2021. Diversified Energy Company PLC was founded in 2001 and is headquartered in Birmingham, Alabama.
How the Company Makes Money
Diversified Energy Company Earnings Call Summary
Earnings Call Date:Nov 03, 2025
(Q3-2025)
| % Change Since: |
Next Earnings Date:Mar 24, 2026
Earnings Call Sentiment Positive
The earnings call highlighted significant achievements in financial performance, strategic acquisitions, and shareholder returns, alongside innovative strategies for asset management and market expansion. However, concerns about undervalued shares and market headwinds were noted.Q3-2025 Updates
Positive Updates
Strong Financial Performance
Adjusted EBITDA for the third quarter reached a record $286 million with an EBITDA margin of 66%. Year-over-year growth in EBITDA and cash flow nearly doubled.
Significant Debt Reduction
In the first three quarters of 2025, debt principal was reduced by approximately $203 million. The overall leverage improved by 20% since year-end 2024, achieving a leverage ratio within the target level of 2x to 2.5x net debt to EBITDA.
Successful Acquisition Strategy
The acquisitions of Maverick Natural Resources and Canvas Energy significantly transformed and strengthened the company, contributing to increased financial guidance and operational leverage.
Record Shareholder Returns
Approximately $146 million returned to shareholders through dividends and strategic share repurchases, representing about 15% of current market capitalization.
Increased Market Presence
Moving primary equity listing to the New York Stock Exchange and redomiciling to a U.S. corporate entity to enhance trading liquidity and increase exposure to U.S. investors.
Innovative Well Retirement Fund
Launched a first-of-its-kind agreement with West Virginia to provide financial assurance for the retirement of all Diversified wells in the state, potentially setting a blueprint for other states.
Negative Updates
Undervalued Share Price
Management expressed disappointment with current share prices, which are perceived as not reflecting the company's true value.
Market Headwinds
Mentioned macro headwinds impacting share valuation, including the allocation of investment funds to high-valued companies.
Company Guidance
During the third quarter of 2025, Diversified Energy reported a remarkable year-over-year growth in EBITDA and cash flow, nearly doubling both metrics. The company executed a systematic debt reduction of approximately $203 million in the first three quarters and returned about $146 million to shareholders, which represents around 15% of its current market cap. Diversified's daily production exit rate for September was approximately 1.14 Bcf per day, with an average quarterly production of over 1.13 Bcf per day. The adjusted EBITDA for the third quarter reached $286 million, boasting a 66% EBITDA margin, while free cash flow stood at $144 million. With net debt at $2.5 billion, the leverage ratio improved by 20% since the end of 2024, achieving a target range of 2x to 2.5x net debt to EBITDA. The company also announced plans to move its primary equity listing to the New York Stock Exchange, which is anticipated to commence trading on November 24.Diversified Energy Company Financial Statement Overview
Summary
Free cash flow is strong and improving (2024 FCF ~$294M, up ~84.7% YoY), but the overall profile is weighed down by sharply weaker profitability (2024 net margin -11.1%, operating profit negative) and a highly leveraged balance sheet (debt-to-equity 3.84 in 2024, with historical strain including negative equity in 2022).Income Statement
Revenue grew 13.6% in 2024, but profitability deteriorated sharply: net margin fell to -11.1% (from an unusually strong 2023) and operating profit turned negative again. Gross margin also compressed meaningfully in 2024 versus prior years, pointing to weaker pricing/cost dynamics and more volatile earnings quality across the cycle.42
Neutral
Balance Sheet
Leverage is high and rising: debt-to-equity increased to 3.84 in 2024 (from 2.23 in 2023), with total debt of ~$1.74B versus equity of ~$0.45B. While equity is positive in 2024, the capital structure has shown strain historically (including negative equity in 2022), and returns to shareholders are currently negative due to losses.33
Negative
Cash Flow
Cash generation is a clear strength: 2024 operating cash flow was ~$346M and free cash flow was ~$294M, with free cash flow up ~84.7% year over year. Despite accounting losses in 2024, free cash flow remained solid, helping support debt service and reinvestment; however, cash flow coverage of reported earnings has been uneven over time, reflecting volatility in the underlying business.71
Positive
| Breakdown | TTM | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 1.18B | 794.84M | 868.26M | 1.92B | 977.04M | 408.69M |
| Gross Profit | 369.35M | 109.45M | 203.16M | 1.25B | 515.35M | 87.44M |
| EBITDA | 309.84M | 170.18M | 1.36B | -476.50M | -332.69M | 23.27M |
| Net Income | -137.81M | -88.27M | 758.02M | -625.41M | -325.21M | -23.47M |
Balance Sheet | ||||||
| Total Assets | 5.66B | 4.00B | 3.47B | 3.83B | 3.49B | 2.29B |
| Cash, Cash Equivalents and Short-Term Investments | 23.74M | 5.99M | 3.75M | 7.33M | 12.56M | 1.38M |
| Total Debt | 2.76B | 1.74B | 1.31B | 1.47B | 1.04B | 736.12M |
| Total Liabilities | 4.94B | 3.54B | 2.88B | 3.97B | 2.83B | 1.40B |
| Stockholders Equity | 716.18M | 452.68M | 585.81M | -152.69M | 647.41M | 886.66M |
Cash Flow | ||||||
| Free Cash Flow | 455.13M | 293.56M | 335.88M | 301.69M | 270.01M | 216.86M |
| Operating Cash Flow | 448.99M | 345.66M | 410.13M | 387.76M | 320.18M | 241.71M |
| Investing Cash Flow | -357.08M | -272.92M | -239.37M | -386.46M | -625.87M | -256.86M |
| Financing Cash Flow | 96.37M | -70.51M | -174.34M | -6.54M | 316.87M | 15.76M |
Diversified Energy Company Peers Comparison
UnderperformOutperform
Sector (65)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
72 Outperform | $1.23B | 22.57 | 14.72% | 12.53% | -12.51% | -59.55% | |
72 Outperform | $2.44B | 14.10 | 7.95% | 8.18% | 1.51% | -78.38% | |
66 Neutral | $1.04B | 13.13 | 986.82% | 7.51% | -14.84% | -16.23% | |
65 Neutral | $15.17B | 7.61 | 4.09% | 5.20% | 3.87% | -62.32% | |
64 Neutral | $1.64B | -75.15 | 4.73% | 13.84% | -2.71% | -113.80% | |
62 Neutral | £1.07B | -5.04 | -22.53% | 8.02% | ― | ― | |
61 Neutral | $281.98M | -1,025.42 | -10.79% | ― | -99.78% | -103.13% |
* Energy Sector Average
DEC
Diversified Energy Company
13.39
-1.94
-12.67%
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SBR
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KRP
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13.43
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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.