Texas Pacific Land (TPL) AI Stock Analysis

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Texas Pacific Land

(NYSE:TPL)

Rating:73Outperform

Price Target:

$1,096.00

▲(9.92%Upside)

Texas Pacific Land's strong financial performance and positive earnings call are the most significant factors in its overall score. The company's robust profitability and strategic initiatives provide resilience. However, technical analysis indicates a bearish trend, and the stock appears overvalued based on its P/E ratio, which slightly offsets the positive aspects.

Texas Pacific Land (TPL) vs. SPDR S&P 500 ETF (SPY)

Market Cap

$22.68B

Dividend Yield0.6%

Average Volume (3M)143.21K

Price to Earnings (P/E)49.6

Beta (1Y)1.08

Revenue Growth10.36%

EPS Growth6.37%

CountryUS

Employees111

SectorEnergy

Sector Strength44

IndustryOil & Gas Exploration & Production

Share Statistics

EPS (TTM)5.24

Shares Outstanding22,987,326

10 Day Avg. Volume114,842

30 Day Avg. Volume143,210

Financial Highlights & Ratios

PEG Ratio34.82

Price to Book (P/B)18.84

Price to Sales (P/S)0.00

P/FCF Ratio351.92

Enterprise Value/Market Cap0.98

Enterprise Value/Revenue7.93

Enterprise Value/Gross Profit33.86

Enterprise Value/Ebitda9.86

Forecast

1Y Price Target

$1,280.00

Price Target Upside28.37% Upside

Rating ConsensusModerate Buy

Number of Analyst Covering1

Texas Pacific Land Business Overview & Revenue Model

Company DescriptionTexas Pacific Land (TPL) is one of the largest landowners in the state of Texas, primarily operating in the land and resource management sector. The company is engaged in managing approximately 900,000 acres of land across 19 counties, with its core services focusing on land sales, leases, and royalties from oil and gas production. TPL also offers water sourcing, treatment, and disposal services to support the energy industry in the region.

How the Company Makes MoneyTexas Pacific Land makes money through several key revenue streams. Firstly, it earns significant income from oil and gas royalties by leasing its land to exploration and production companies, who extract these resources. The company benefits from a percentage of the revenues generated from oil and gas sales on its land. Secondly, TPL generates revenue through land sales and leases, including surface leases for various uses like grazing or commercial activities. Additionally, TPL capitalizes on the growing demand for water solutions in the oil and gas sector by providing water sourcing, treatment, and disposal services. These services are critical for hydraulic fracturing and other energy production processes. The company's strategic location in the prolific Permian Basin and partnerships with major energy producers further enhance its earnings potential.

Texas Pacific Land Earnings Call Summary

Earnings Call Date:May 07, 2025

(Q1-2025)

% Change Since: -25.67%|

Next Earnings Date:Aug 06, 2025

Earnings Call Sentiment Positive

The earnings call presented a largely positive outlook with record production levels and strong financial metrics. However, there are concerns about commodity price sensitivity and potential declines in Permian activity that could impact future performance. The company's strong financial position and strategic initiatives provide resilience against potential downturns.

Q1-2025 Updates

Positive Updates

Record Oil and Gas Royalty Production

TPL set a quarterly record with oil and gas royalty production averaging approximately 31,100 barrels of oil equivalent per day, representing 7% growth sequential quarter-over-quarter and 25% growth year-over-year.

Strong Water Segment Revenue

Water segment revenues totaled $69 million, showing a 3% sequential quarter-over-quarter growth and 11% growth year-over-year, driven by robust volume gains in water sales and produced water royalties.

High Adjusted EBITDA Margin

Consolidated adjusted EBITDA was $169 million with an adjusted EBITDA margin of 86.4%.

Robust Near-Term Well Inventory

TPL's near-term well inventory reached an all-time high with 24.3 net wells, which is 7% higher sequential quarter-over-quarter and 38% higher year-over-year.

Strong Financial Position

TPL maintains a net cash position with zero debt and $460 million in cash and cash equivalents.

Easement Renewal Payments

TPL anticipates benefiting from easement renewal payments with CPI escalators, expecting renewal payments of approximately $10 million in 2026, ramping up to $35 million per year in subsequent years.

Negative Updates

Commodity Price Sensitivity

TPL's oil and gas royalties are directly exposed to commodity prices, and a sustained oil price below $60 could result in a downturn in activity.

Potential Decline in Permian Activity

Feedback from operators indicates cautious evaluation of activity plans, and a potential decline in Permian activity could impact TPL's revenue streams.

Delayed Desalination Unit Launch

The Phase IIb desalination unit is now expected to come online by the end of the year, indicating a delay in its launch.

Company Guidance

During the Texas Pacific Land Corporation First Quarter 2025 Earnings Call, the company reported record performance in several key metrics. Oil and gas royalty production averaged approximately 31,100 barrels of oil equivalent per day, marking a 7% sequential increase and a 25% growth year-over-year. Water segment revenues reached $69 million, showing a 3% quarter-over-quarter growth and an 11% increase year-over-year. Consolidated revenues for the quarter were $196 million, with an adjusted EBITDA of $169 million and an impressive EBITDA margin of 86.4%. Free cash flow stood at $127 million, reflecting an 11% increase compared to the previous year. Additionally, the company highlighted a robust near-term well inventory, with 24.3 net wells, including 5.9 net permitted wells, 12.9 net drilled but uncompleted wells, and 5.4 net completed but not producing wells. Despite potential challenges from fluctuating oil prices, TPL emphasized its strong financial position, with a net cash position, zero debt, and $460 million in cash and cash equivalents as of March 31, 2025.

Texas Pacific Land Financial Statement Overview

Summary

Texas Pacific Land shows strong financial performance with excellent profitability and robust growth. The balance sheet is notably strong with minimal debt and high equity. Strong operational efficiency and cash flow growth further enhance the company's financial health.

Income Statement

Very Positive

Texas Pacific Land has shown strong revenue growth from $631.6 million in 2023 to $705.8 million in 2024, a growth rate of 11.8%. The gross profit margin is excellent at 100%, indicating effective cost management. The net profit margin is robust at 64.3%, showing strong profitability. EBIT and EBITDA margins are also high at 76.4% and 85.6% respectively, showcasing strong operational efficiency.

Balance Sheet

Very Positive

The company's balance sheet is notably strong with a debt-to-equity ratio of practically zero due to minimal debt. Return on equity is impressive at 40.1%, reflecting efficient use of shareholder funds. The equity ratio is high at 90.7%, suggesting a stable financial foundation with a low level of liabilities.

Cash Flow

Very Positive

The free cash flow growth rate is substantial at 21.8%, indicating improved cash generation. The operating cash flow to net income ratio is 1.08, showing healthy cash flow relative to earnings. The free cash flow to net income ratio is 1.02, demonstrating efficient conversion of profits into cash.

Breakdown	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	705.82M	631.60M	667.42M	450.96M	302.55M
Gross Profit	634.54M	583.27M	634.53M	421.47M	269.95M
EBITDA	564.30M	500.81M	577.68M	378.65M	231.66M
Net Income	453.96M	405.64M	446.36M	269.98M	176.05M
Balance Sheet
Total Assets	1.25B	1.16B	877.43M	764.06M	571.63M
Cash, Cash Equivalents and Short-Term Investments	369.83M	725.17M	510.83M	428.24M	281.05M
Total Debt	453.00K	1.17M	1.96M	1.45M	2.82M
Total Liabilities	115.56M	113.20M	104.54M	112.35M	86.45M
Stockholders Equity	1.13B	1.04B	772.89M	651.71M	485.18M
Cash Flow
Free Cash Flow	65.40M	378.29M	426.27M	249.62M	185.00M
Operating Cash Flow	490.67M	418.29M	447.15M	265.16M	207.04M
Investing Cash Flow	-471.75M	-60.31M	-21.40M	-15.00M	-26.00M
Financing Cash Flow	-378.09M	-144.61M	-336.81M	-104.95M	-201.66M

Texas Pacific Land Technical Analysis

Technical Analysis Sentiment

Negative

Last Price997.11

Price Trends

50DMA

1150.61

Negative

100DMA

1228.80

Negative

200DMA

1242.96

Negative

Market Momentum

MACD

-38.23

Positive

RSI

32.69

Neutral

STOCH

30.22

Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TPL, the sentiment is Negative. The current price of 997.11 is below the 20-day moving average (MA) of 1042.82, below the 50-day MA of 1150.61, and below the 200-day MA of 1242.96, indicating a bearish trend. The MACD of -38.23 indicates Positive momentum. The RSI at 32.69 is Neutral, neither overbought nor oversold. The STOCH value of 30.22 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for TPL.

Texas Pacific Land Peers Comparison

Overall Rating

UnderperformOutperform

Sector (67)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
EQT	76 Outperform	$36.92B	101.31	2.06%	1.07%	39.56%	-59.84%
FANG	76 Outperform	$39.87B	8.62	14.26%	2.84%	47.89%	-7.87%
CTRA	76 Outperform	$18.46B	14.27	9.40%	3.64%	10.33%	-0.13%
DVN	75 Outperform	$20.39B	7.46	20.88%	2.93%	12.06%	-16.37%
TPL	73 Outperform	$22.68B	49.62	39.52%	0.60%	10.36%	6.37%
OXY	71 Outperform	$41.95B	17.63	9.43%	2.20%	1.35%	-33.30%
Sector *	67 Neutral	$15.20B	9.67	6.33%	5.25%	4.05%	-66.98%

* Energy Sector Average

Performance Comparison

TPL

Texas Pacific Land

997.11

186.62

23.03%

CTRA

Coterra Energy

24.39

-1.51

-5.83%

DVN

Devon Energy

32.85

-13.40

-28.97%

EQT

59.19

23.85

67.49%

OXY

Occidental Petroleum

43.62

-18.30

-29.55%

FANG

Diamondback

141.37

-57.85

-29.04%

Texas Pacific Land Corporate Events

Financial Disclosures

Texas Pacific Land Reports Record Q1 2025 Results

Positive

May 7, 2025

On May 7, 2025, Texas Pacific Land Corporation announced its first-quarter 2025 financial results, highlighting record oil and gas royalty production and water services revenue. The company reported a net income of $120.7 million and total revenues of $196.0 million, driven by increased oil and gas royalty revenue and water sales. Despite economic volatility, TPL’s strong financial position and business model allow it to remain resilient and opportunistic.

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.Date of analysis: Jul 16, 2025