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Diversified Energy Co

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Diversified Energy Co AI Insights

Informational only. Not investment advice.
As of 2025-12-18

Snapshot

  • Debt/equity of 3.85x with 175M TTM interest expense exceeds operating income (159M) - interest coverage below 1x signals distress.[Debt to Equity]
  • FCF TTM of 328M funds 1.16/share dividend (300M+ payout) while net income is -138M - dividend funded by asset depletion.[Free Cash Flow TTM]
  • EV/Revenue of 2.9x vs P/S of 0.67x reflects 2.7B net debt burden - equity is a levered call option on oil prices.[Enterprise Value]

Watch Triggers

  • Interest Expense TTM: Exceeds EBITDA (currently 307M) by >60%Would signal imminent covenant breach or restructuring need
  • Dividends Paid Per Share TTM: Cut below $0.80 annuallyDividend cut would confirm cash flow insufficiency thesis
  • Total Debt: Rises above 3B or refinancing at rates >10%Higher rates on 2.8B debt would consume remaining FCF

Bull Case

FCF yield of 40% (328M FCF on 811M market cap) with P/B of 1.15x offers deep value if oil prices stabilize above $70.

Free Cash Flow TTMP/B RatioP/S Ratio

4.7B PPE base generates 449M operating cash flow TTM - assets produce despite accounting losses from non-cash charges.

Cash Flow TTMPPETotal Unusual Items TTM

Bear Case

Interest expense 175M exceeds EBIT of 6M - company is technically insolvent on earnings basis, surviving on depreciation add-backs.

Interest Expense TTMEBIT TTMDebt to Equity

Revenue down 9.4% 3Y CAGR while debt remains 2.8B - declining production base cannot service capital structure long-term.

Total Revenue 3Y Growth TTMTotal DebtNet Debt

Bull vs Bear Balance

AI-generated sentiment analysis based on fundamental metrics and market conditions.

BearBull
30%

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Forward Thesis

Dividend sustainability at risk within 12-18 months without asset sales or debt refinancing

3-12mhigh
  • Interest expense (175M) exceeds operating income (159M)
  • Net income -138M while paying 300M+ dividends
  • Current debt of 216M due with only 24M cash
Debt/equity 3.85x vs industry median ~0.5xWorking capital -419M limits flexibilityFCF 328M barely covers dividend + debt service

Valuation Context

Caveats

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Fundamental company data provided by Morningstar, updated daily.

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