ConocoPhillips is Not so Pricey: Should Investors Bet on the Stock Now?

ConocoPhillips COP is currently trading at a 12-month enterprise value to EBITDA (EV/EBITDA) of 5.24X. This is below the broader industry average of 10.90X, Exxon Mobil Corporation’s XOM 7.02X and EOG Resources Inc’s EOG 5.42X. Notably, ExxonMobil and EOG are two other energy giants with a significant presence in upstream operations. Image Source: Zacks Investment ResearchTherefore, with the stock currently undervalued, should investors consider investing in the exploration and production stock now? However, before making any investment decisions, we should analyze the factors that should influence the upstream giant and its business fundamentals.Marathon Oil’s Integration Makes COP’s Operations Cost-EffectiveIn its second-quarter 2025 earnings call transcript, COP mentioned the completion of the integration of Marathon Oil’s assets with its own resources and boasted that the result is overwhelming. The upstream giant has revised upward its estimate for key low-cost resources after the combination by 25%, thanks to the Permian, the most prolific basin in the United States.During the call, ConocoPhillips revealed that its overall operations have become more efficient following the successful integration, as reflected by the global upstream giant expecting annual cost synergies of more than $1 billion by 2025-end. COP also made an impressive statement in the call that the acquisition has made it possible for the combined operations to produce more volumes while reducing the drilling rigs and crews' involvement by 30%.Massive Cashflow Growth Awaits ConocoPhillipsAs mentioned in the call, backed by key new developments in liquified natural gas (LNG) and Alaska, COP is expecting an additional annual free cash flow of $7 billion every year from 2029 onward. Thus, ConocoPhillips will likely be better positioned to allocate the incremental cash flows for rewarding shareholders, further increasing its balance sheet strength and investing in new growth projects. Notably, COP already has a strong balance sheet with a debt-to-capitalization of 26.4%. ExxonMobil and EOG Resources also have a strong balance sheet, with their debt-to-capitalization ratios being further lower than COP. Image Source: Zacks Investment ResearchConocoPhillips is also diversifying its portfolio beyond oil and is strengthening its footing to capitalize on growing cleaner fuel demand. This initiative is getting reflected in the COP’s recent agreement to buy 4 million tonnes of LNG every year from the planned Port Arthur LNG Phase 2 project in Texas for a period of 20 years.Should Investors Bet on COP Now?Despite the positive developments, COP’s price chart is not so attractive. Over the past year, shares of the company lost 9.1% compared with a 12.8% dip of the industry’s composite stocks. Over the same time frame, XOM dipped 1.6%, while EOG gained a marginal 1%.One-Year Price Chart Image Source: Zacks Investment ResearchThe price chart signifies an uncertain business environment in the overall industry. Per the U.S. Energy Information Administration (“EIA”), expectations for inventory builds across the globe are leading to lower oil prices. In 2025, EIA projects the spot average price of West Texas Intermediate crude at $63.58 per barrel, lower than last year’s $76.60. Expectations for lower oil prices are likely to hurt COP’s bottom line as the company is a major producer of the commodity.Thus, investors shouldn’t jump into betting on the stock right away. However, those who have already invested should continue to hold the stock, currently carrying a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.Zacks Names #1 Semiconductor StockThis under-the-radar company specializes in semiconductor products that titans like NVIDIA don't build. It's uniquely positioned to take advantage of the next growth stage of this market. And it's just beginning to enter the spotlight, which is exactly where you want to be.With strong earnings growth and an expanding customer base, it's positioned to feed the rampant demand for Artificial Intelligence, Machine Learning, and Internet of Things. Global semiconductor manufacturing is projected to explode from $452 billion in 2021 to $971 billion by 2028.See This Stock Now for Free >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Exxon Mobil Corporation (XOM): Free Stock Analysis Report ConocoPhillips (COP): Free Stock Analysis Report EOG Resources, Inc. (EOG): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks