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Magnolia Oil & Gas (MGY)
NYSE:MGY
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Magnolia Oil & Gas
(NYSE:MGY)
71Outperform
Positive Factors
Capital Returns
MGY continues to execute on the capital returns front with $84.9 million to be returned based on 4Q24 results, which is 5.3% above the estimate.
Dividend Growth
The company announced a 15% increase to its quarterly base dividend, exceeding expectations and its long-term target for annual dividend growth.
Negative Factors
Production Guidance
The first quarter of 2025 volume guidance is slightly below some expectations, signaling potential challenges in meeting higher forecasts.
Magnolia Oil & Gas (MGY) vs. S&P 500 (SPY)
Market Cap
$4.44B
Dividend Yield2.36%
Average Volume (3M)2.42M
Price to Earnings (P/E)11.8
Beta (1Y)1.00
Revenue Growth7.25%
EPS Growth-4.99%
CountryUS
Employees252
SectorEnergy
Sector Strength72
IndustryFossil Fuels
Share Statistics
EPS (TTM)1.94
Shares Outstanding188,635,830
10 Day Avg. Volume2,937,676
30 Day Avg. Volume2,417,153
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)3.39
Price to Cash Flow (P/CF)5.10
P/FCF Ratio9.80
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$27.33Price Target Upside19.45% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering10
Magnolia Oil & Gas Business Overview & Revenue Model
Company DescriptionMagnolia Oil & Gas Corp. is engaged in oil and gas exploration and production business. It operates assets located in the Eagle Ford Shale and Austin Chalk formations in South Texas. The company was founded on July 31, 2018 and is headquartered in Houston, TX.
How the Company Makes MoneyMagnolia Oil & Gas generates revenue primarily through the production and sale of crude oil and natural gas. The company's revenue streams are derived from extracting hydrocarbons from its operated properties, which are then sold in the commodities markets. Key factors contributing to its earnings include production volumes, commodity prices, and operational efficiencies. Additionally, Magnolia Oil & Gas may engage in strategic partnerships or joint ventures to optimize its asset portfolio and enhance production capabilities, although specific partnerships are not detailed here.
Magnolia Oil & Gas Financial Statement Overview
Summary
Magnolia Oil & Gas shows strong financial health with zero debt, a solid equity position, and effective cash generation. The company has improved its revenue and operational margins, although net income growth remains a challenge. The solid balance sheet and cash flow position provide a stable foundation for future growth.Income Statement
The income statement shows a mixed trend for Magnolia Oil & Gas. The company experienced a moderate increase in revenue to $1.32 billion in TTM (Trailing-Twelve-Months) compared to $1.23 billion in the previous year, indicating a revenue growth rate of approximately 7.24%. The gross profit margin improved to 63.87% in TTM, reflecting efficient cost management. However, net profit margin decreased slightly to 27.81% in TTM from 31.66% last year, primarily due to reduced net income. EBITDA margin remained strong at 68.35% in TTM, showcasing robust operational performance. The company needs to focus on maintaining its net income to improve profitability.68
Positive
Balance Sheet
Magnolia Oil & Gas exhibits a strong balance sheet with zero debt in TTM, indicating financial prudence and a significant reduction from $409.55 million in the previous year. The company has a high equity ratio of 26.75% in TTM, reflecting a solid equity position. Return on equity (ROE) stands at 48.50%, demonstrating effective utilization of shareholder funds. The company's strong cash position and equity base provide a stable financial foundation, though the company should aim to improve its asset base to enhance long-term growth.75
Positive
Cash Flow
The company's cash flow performance is steady with operating cash flow increasing to $920.85 million in TTM from $855.79 million last year. Free cash flow decreased to $291.40 million in TTM from $430.90 million, mainly due to higher capital expenditure. The operating cash flow to net income ratio is robust at 2.52, indicating strong cash generation ability relative to net income. Despite the decline in free cash flow, the company maintains a healthy cash flow position with adequate liquidity to fund operations and investments.72
Positive
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 1.32B | 1.23B | 1.69B | 1.08B | 534.51M | Gross Profit |
| 680.69M | 692.89M | 1.26B | 742.76M | 128.81M | EBIT |
| 511.99M | 534.49M | 1.07B | 602.59M | -544.41M | EBITDA |
| 922.00M | 878.67M | 1.33B | 801.53M | -1.62B | Net Income Common Stockholders |
| 366.03M | 388.30M | 893.84M | 559.72M | -1.87B |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 260.05M | 401.12M | 675.44M | 366.98M | 192.56M | Total Assets |
| 2.82B | 2.76B | 2.57B | 1.75B | 1.45B | Total Debt |
| 392.51M | 409.55M | 390.38M | 388.09M | 391.12M | Net Debt |
| -260.05M | 8.43M | -285.06M | 21.11M | 198.55M | Total Liabilities |
| 853.51M | 873.55M | 832.39M | 701.49M | 614.00M | Stockholders Equity |
| 1.97B | 1.69B | 1.58B | 816.76M | 548.16M |
| Cash Flow | Free Cash Flow | |||
| 431.74M | 430.90M | 831.55M | 552.05M | 87.91M | Operating Cash Flow |
| 920.85M | 855.79M | 1.30B | 788.48M | 310.12M | Investing Cash Flow |
| -655.12M | -814.90M | -518.89M | -243.44M | -269.99M | Financing Cash Flow |
| -406.80M | -315.21M | -469.34M | -370.61M | -30.20M |
Magnolia Oil & Gas Technical Analysis
Negative
22.88
Price Trends
23.96
Negative
24.92
Negative
24.89
Negative
Market Momentum
-0.29
Negative
46.16
Neutral
63.18
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For MGY, the sentiment is Negative. The current price of 22.88 is below the 20-day moving average (MA) of 23.33, below the 50-day MA of 23.96, and below the 200-day MA of 24.89, indicating a bearish trend. The MACD of -0.29 indicates Negative momentum. The RSI at 46.16 is Neutral, neither overbought nor oversold. The STOCH value of 63.18 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for MGY.
Magnolia Oil & Gas Peers Comparison
Overall Rating
UnderperformOutperform
Sector (57)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
81 Outperform | $5.88B | 6.31 | 19.67% | 2.05% | 23.47% | 0.80% | |
71 Outperform | $4.44B | 11.80 | 20.06% | 2.36% | 7.25% | -4.99% | |
71 Outperform | $3.33B | 4.36 | 19.62% | 2.61% | 13.33% | -2.72% | |
57 Neutral | $8.36B | 5.47 | -5.51% | 7.41% | 0.15% | -68.69% | |
56 Neutral | $9.04B | 33.39 | 6.88% | 0.85% | -7.57% | -69.25% | |
49 Neutral | $5.38B | ― | -9.51% | 0.66% | -22.76% | -199.21% |
* Energy Sector Average
Performance Comparison
MGY
Magnolia Oil & Gas
23.08
-0.50
-2.12%
CRK
Comstock Resources
18.14
9.86
119.08%
MTDR
Matador Resources
48.28
-16.86
-25.88%
RRC
Range Resources
37.60
5.46
16.99%
SM
SM Energy
29.78
-16.25
-35.30%
Magnolia Oil & Gas Earnings Call Summary
Earnings Call Date: Feb 18, 2025 | % Change Since: -4.19% | Next Earnings Date: May 13, 2025
Earnings Call Sentiment Positive
The earnings call highlighted Magnolia's strong operational and financial performance in 2024, with record production, effective cost reduction initiatives, and significant shareholder returns. However, the decline in revenue due to lower oil prices and limited exploration work were noted as concerns. Overall, the company's strong balance sheet and strategic focus on shareholder value contributed to a positive outlook.Highlights
Record Quarterly Production Volume
Magnolia ended 2024 with a record quarterly production volume of 93.1 thousand barrels of oil equivalent per day, leading to a full-year production growth of 9% and oil production growth of 11%.
Strong Financial Performance
Total adjusted net income for the year was approximately $401 million, and adjusted EBITDA was $953 million. Magnolia's return on capital employed was 22%, indicating strong financial health.
Significant Shareholder Returns
Magnolia returned 88% of its free cash flow, or $378 million, to shareholders through dividends and share repurchases. The board also approved a 15% increase in the quarterly dividend.
Cost Reduction Initiatives
Magnolia successfully lowered lease operating costs by 10% per BOE, contributing to a strong cost structure and high operating margins.
Strong Balance Sheet
Magnolia ended the year with $260 million in cash and a total liquidity of $710 million, maintaining a low leverage and high financial flexibility.
Lowlights
Decreased Revenue from Lower Oil Prices
Total revenue per BOE declined year-over-year due to a decrease in oil prices, affecting the operating income margin.
Limited Exploration and Appraisal Work
While Magnolia is exploring new areas, the current focus is more on development rather than exploration, which could limit future growth opportunities.
Company Guidance
In the fourth quarter of 2024, Magnolia Oil & Gas Corporation concluded the year with strong operational and financial performance, achieving record quarterly production of 93.1 thousand barrels of oil equivalent per day (BOE/d), leading to a total annual production growth of 9%. The company reported an adjusted net income of approximately $401 million for the year, with an adjusted EBITDA of $953 million. Their disciplined capital spending resulted in a reinvestment rate of 50%, allowing them to generate $430 million in free cash flow, returning 88% of it to shareholders through dividends and share repurchases. Magnolia successfully reduced lease operating costs by 10% per BOE and achieved a return on capital employed of 22%. Looking ahead to 2025, Magnolia plans to maintain capital spending between $460 million to $490 million, aiming for a 5% to 7% production growth, and has increased its quarterly dividend by 15% to 15 cents per share, alongside authorizing the repurchase of an additional 10 million shares.Magnolia Oil & Gas Corporate Events
Stock BuybackDividendsBusiness Operations and StrategyFinancial Disclosures
Magnolia Oil & Gas Boosts Dividend Amid Strong Results
Positive
Feb 18, 2025
On February 18, 2025, Magnolia Oil & Gas Corporation announced its financial and operational results for the fourth quarter and full year 2024. The company’s net income for 2024 decreased compared to the previous year, but it achieved significant production growth and added substantial reserves. Magnolia’s disciplined capital program and low reinvestment rate delivered strong free cash flow, enabling it to return a high percentage of this cash to shareholders through dividends and share repurchases. The Board of Directors also increased the quarterly dividend by 15% and authorized additional share repurchases, reflecting confidence in the company’s financial health and operational strategy.
Executive/Board ChangesBusiness Operations and Strategy
Magnolia Oil & Gas Board Appointment and Disclosure Update
Positive
Jan 7, 2025
Magnolia Oil & Gas Corporation announced the appointment of R. Lewis Ropp as an independent director to its board, effective immediately. Mr. Ropp, who brings extensive experience in finance, capital markets, and oil and gas operations, will also join the Audit Committee. His appointment is expected to enhance the board with his expertise in safety and environmental compliance, aligning with Magnolia’s strategic goals and potentially strengthening its industry positioning.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
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.