Avner Oil Exploration LP : Neutral assessment on price but strong on fundamentals

Avner Oil Exploration LP relative valuation is now NEUTRAL. It was previously rated OVERVALUED, and has a fundamental analysis score of 68.

Our analysis is based on comparing Avner Oil Exploration LP with the following peers – Modiin Energy LP, Delek Group Ltd., Ratio Oil Exploration 1992 Lp and Delek Drilling LP (MDIN.L-IL, DLEKG-IL, RATI.L-IL and DEDR.L-IL).

Relative Valuation

Avner Oil Exploration LP is currently neutrally valued, as its previous close of ILS 2.46 lies within the CapitalCube estimate range of ILS 2.26 to ILS 2.47. Over the last 52 week period, Avner Oil Exploration LP has fluctuated between ILS 2.02 and ILS 2.82.

Relative Valuation

Company Overview

  • Compared to peers, relative underperformance over the last year is in contrast with the more recent outperformance.
  • It’s current Price/Book of 5.62 is about median in its peer group.
  • AVNR.L-IL‘s operating performance is relatively good compared to its peers. The market currently does not expect high earnings growth relative to its peers but seems to expect the company to maintain its relatively high rates of return.
  • AVNR.L-IL has a successful operating model with relatively high net profit margins and asset turns.
  • Changes in annual revenues (relative to peers) are better than the change in its earnings (relative to peers), implying the company is focused more on revenues.
  • AVNR.L-IL‘s return on assets currently and over the past five years suggest that its relatively high operating returns are sustainable.
  • AVNR.L-IL‘s revenue growth in recent years and current P/E ratio are both around their respective peer medians suggesting that historical performance and long-term growth expectations for the company are largely in sync.
  • The company’s level of capital investment suggests it might be under-investing in a business with above median returns.
  • AVNR.L-IL seems to be constrained by the current level of debt.

Investment Outlook

Avner Oil Exploration LP has a fundamental score of 68 and has a relative valuation of NEUTRAL.

Avner Oil Exploration LP appears on the top right hand quadrant of CapitalCube’s Value – Price Matrix. We classify this as ‘Safety’. In other words, Avner Oil Exploration LP has a relatively high Fundamental Analysis score of 68, while being potentially overvalued and trading higher than its CapitalCube Implied Price of 2.36. There might be some safety in this stock where it’s fundamental strength perhaps justifies its relatively higher price.

Fundamentals Vs Relative Valuation

Quadrant label definitions. Hover to know more

Safety, Value Play, Value Trap, Speculative

Drivers of Valuation

The market seems to expect AVNR.L-IL to maintain its relatively high returns.

AVNR.L-IL‘s operating performance is higher than the median of its chosen peers (ROE of 48.26% compared to the peer median ROE of 4.16%) but the market does not seem to expect higher growth relative to peers (P/E of 12.71 compared to peer median of 15.18) but simply to maintain its relatively high rates of return.

The company’s current Price/Book of 5.62 is about median in its peer group.

Valuation Drivers

Quadrant label definitions. Hover to know more

Outperforming, Harvesting, Challenged, Turnaround

AVNR.L-IL has moved to a relatively high ROE from an Harvesting profile at the prior year-end.

ROE % (On Common Equity)
Price To Earnings

Peer Analysis

A complete list of valuation metrics is available on the company page.

Company Profile

Avner Oil Exploration LP engages in the exploration, extraction, and production of oil and gas. Its products include natural gas, condensate, and petroleum. The company was founded on August 6, 1991 and is headquartered in Herzliya, Israel.

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