Company Overview
California Resources Corporation functions as an independent energy and carbon management entity operating primarily within the United States, focusing on the exploration, development, and production of crude oil, oil condensate, natural gas liquids, and natural gas. The company operates within the broader Energy sector, specifically categorized under the Oil & Gas E&P industry, which implies a business model heavily dependent on commodity price fluctuations and upstream production efficiency. The firm employs approximately 2,500 individuals and maintains a market capitalization of $6.11B, reflecting its status as a mid-cap player in the energy landscape. With an annual revenue of $3.40B, these valuation metrics indicate that the company holds a significant operational footprint, suggesting substantial asset base and production capacity relative to smaller peers in the independent energy space.
Financial Health
The company reported a trailing twelve-month revenue of $3.40B and generated a net income of $363.00M, resulting in an EBITDA of $1.26B. The substantial gap between the $3.40B revenue and the $363.00M net income reveals a cost structure where operating expenses, including depletion, depreciation, and administrative costs, absorb approximately 89.3% of total revenue before arriving at the bottom line. The enterprise generated free cash flow of $544.63M, which provides the organization with significant financial flexibility to fund capital expenditures, service debt obligations, or return capital to shareholders without requiring external financing. Profitability is further detailed through three key margins: a gross margin of 54.4%, an operating margin of 18.7%, and a profit margin of 10.7%, where the gross margin indicates efficient cost of goods sold management, the operating margin reflects operational leverage and overhead control, and the profit margin demonstrates the final return on sales after all expenses. Liquidity and leverage are assessed through a cash position of $132.00M against total debt of $1.36B, coupled with a debt-to-equity ratio of 37.04%, indicating a leveraged balance sheet where interest coverage is critical for survival during downturns. Short-term liquidity is constrained by a current ratio of 0.89, suggesting that current assets are slightly lower than current liabilities, which requires careful management of working capital to meet upcoming obligations. Finally, the return on equity stands at 10.1% while the return on assets is 6.4%, metrics that collectively reveal management's effectiveness in generating returns on the capital provided by shareholders and the total asset base respectively.
Valuation Assessment
Valuation multiples for California Resources Corporation include a trailing P/E ratio of 16.60 and a forward P/E of 20.99, where the higher forward multiple implies that the market expects earnings to contract in the future or that current earnings are anomalously high compared to anticipated future performance. The price-to-book ratio is recorded at 1.66, indicating that the market values the company's equity at a 66% premium over its net asset book value, a common characteristic in capital-intensive industries where intangible assets or strategic reserves are not fully captured on the balance sheet. Alternative valuation metrics such as a price-to-sales ratio of 1.80 and an EV/EBITDA of 5.83 offer context on how the stock is priced relative to its sales volume and cash generation capabilities, suggesting the company trades at a moderate multiple to its earnings before interest, taxes, depreciation, and amortization. Price volatility is contextualized by a 52-week high of $69.31 and a 52-week low of $30.97, meaning the current trading price sits significantly below the yearly peak but well above the yearly trough, reflecting a stabilization after a period of high commodity or market volatility. The stock exhibits a beta of 1.15, which signifies that the share price is 15% more volatile than the broader market, implying that the stock will likely amplify market movements rather than dampen them during periods of equity market turbulence.
Growth & Income
The company's recent performance shows a revenue growth rate of -13.8% year-over-year and an earnings growth rate of -61.5% year-over-year, indicating that earnings are contracting at a much faster pace than revenue, which often points to declining commodity prices or increased operational costs eroding profitability. As a dividend payer, California Resources Corporation offers a dividend yield of 2.4% with a payout ratio of 37.8%, a distribution level that appears sustainable given that the payout ratio is well below 100% and the company maintains positive free cash flow. The relatively low payout ratio suggests the company retains a significant portion of its earnings to reinvest in its energy projects or reduce debt rather than distributing the maximum possible amount to shareholders. The overall growth and income profile is characterized by a challenging revenue environment with double-digit contraction, a highly leveraged balance sheet, but a continued commitment to shareholder returns through a modest yet consistent dividend yield.