Range Resources Corp. (RRC): Should We Follow T. Boone Pickens Into This Oil And Gas Stock?

The most expensive but the least profitable

At $82 per share, Range Resources Corp. (NYSE:RRC) is worth around $13.4 billion on the market. The market values the company quite expensively at 20.3 times EV/EBITDA. Range Resources has a much higher valuation than those of its larger peers, including Chesapeake Energy (NYSE:CHK) and ExxonMobil Corporation. Chesapeake is trading at around $22 per share, with a total market cap of more than $14 billion. It is valued at a much cheaper valuation of only 6.26 times EV/EBITDA. ExxonMobil is the largest company among the three and has the lowest valuation as well. At $89 per share, ExxonMobil is worth around $400 billion on the market. It has an EV multiple of only 5.48.

Interestingly, although Range Resources has a significantly higher valuation, it is the least profitable among the three. It generated only 11.4% operating margin, while the operating margins of Chesapeake and ExxonMobil were 13.5% and 13.4%, respectively. Range Resources also pays the lowest dividend yield at only 0.2%. While the dividend yield of Chesapeake is 1.6%, ExxonMobil pays its shareholders the highest dividend with a yield of 2.5%.

My Foolish take

With a significantly high valuation, low dividend yield, not-so-strong balance sheet, and fluctuating operating performance, I personally do not think Range Resources Corp. (NYSE:RRC) should be in the portfolio of any value investors. Among the three, I would prefer Chesapeake due to its highest profitability, decent dividend yield, and low valuation.

The article Should We Follow T. Boone Pickens Into This Oil And Gas Stock? originally appeared on Fool.com and is written by Anh HOANG.

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