CNX Resources (CNX), mcap=$3.4bn, price $17.85 vs $17.35

$CNX pitch:
– One of the largest natural gas producers in the Appalachian Basin with fully owned midstream assets.
– Chairman William Thorndike of ‘Outsiders’ fame – fully focused on proper capital allocation.
– In a conservative scenario a double in the next 4-5 years.
– Orphaned stock, trades at 4x EBITDA with almost all production hedged at significantly lower prices – 70% of ’23 and 60% of ’24 gas production hedged at $2 vs $9 spot.
– These legacy hedges indicate management’s conservatism during shale go-go years rather than idiocy.
– Continues to retire debt and repurchase shares with 16% of outstanding bought back over the last two years.
– FCF per share doubled since 2020.
– Management intends to allocate 80% of FCF to buyback, reducing the share count by a further 54% by 2026.

$CNX valuation:
– Trades at 4x EBITDAX at depressed hedged pricing.
– FCF yield in the low 20s.

Exp. gain: A double or more in 4-5 years.

Full CNX write-up (free guest account required):

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