An assessment of Diamondback Energy's earnings outlook through 2029 indicates accelerating EPS growth, while targets have been presented for 2029 revenue and profit.
Diamondback Energy is attracting attention as drilling and completion operations are expected to become more efficient, particularly in the Permian Basin, with EPS through 2029 forecast to grow 44.16% year on year. Targets have also been presented for revenue of US$16.5 billion and profit of US$4.9 billion in 2029.
The current analyst valuation framework assumes that revenue will expand at an annual rate of 4.5% over the next 3 years and that the profit margin will rise from approximately 1.9% currently to 29.9% in 2029. These assumptions are said to form the basis of the target price model, supported by consensus forecasts of 2029 revenue of US$16.5 billion and profit of US$4.9 billion.
As a share-related factor, the number of shares outstanding is expected to decline by approximately 2.82% annually over the next 3 years, which is expected to lift EPS even if net profit remains unchanged. The report states that comparisons between share buybacks as a use of capital and other alternatives should be considered in investment decisions.
The analysis report points out that risks including rising water management, service and electricity costs in the Permian Basin could undermine the assumptions underlying profit growth. It explains that investors should consider the impact of these factors on the 2029 forecasts.