One-glance verdict
Undervalued
$54.22 our estimate vs market $24.10
Wall Street consensus: $33.29 (-38.6% lower than our fair-value estimate)
56% below our estimate, below the bear case
Fundamentals snapshot
Magnolia Oil & Gas Corporation
MGY · NYQ · Energy · Oil & Gas E&P
Current price
$24.10
52-week range
$21.07 - $32.76
Market cap
$6.62B
Balance sheet
Healthy
20.32x Strong cushion
Net debt $117.19M. Interest coverage shows how many times profit covers the interest bill.
What stands out
3 Rewards
2 Risks
3 rewards · 2 risks
- Reward Revenue grew 12.8% last year.
- Reward Returns 20.9% on equity, ahead of 66% of its peers.
- Risk Operating margin compressed from 63.4% to 50.7% over 3 years.
- Risk Stock trades 5.4% above its 5-year average P/E.
What this company does
Magnolia Oil & Gas Corporation
Magnolia Oil & Gas Corporation finds and pumps oil and natural gas, mostly from fields in South Texas. This matters because their profits are tied to the price of oil and gas, so when those prices go up, their earnings tend to go up too, and vice versa. Their business relies on extracting these natural resources and selling them to others who will refine them into gasoline and other products.
How the company got here
Magnolia Oil & Gas Corporation was formed in 2018 through a combination of existing oil and gas assets and a special purpose acquisition company. The company's strategy from the outset has been to focus on generating returns and maintaining capital discipline, rather than pursuing growth for its own sake. A significant expansion occurred in 2022 with the acquisition of Validus Energy, which added considerable scale and acreage, particularly in the Giddings and South Texas regions. This move has shaped the company's recent history, focusing on integrating this larger portfolio and continuing its strategy of returning value to shareholders.
What it actually does
Magnolia Oil & Gas is an independent company that explores for, develops, and produces oil and natural gas. Think of them as a modern-day prospector, but instead of searching for gold, they're looking for underground reserves of crude oil and natural gas. They then sell these raw materials to larger companies that refine them into products like gasoline, or use the natural gas for heating and electricity. Their business is centered in South Texas, specifically in areas known for rich oil and gas deposits.
Eagle Ford Shale and Austin Chalk
Magnolia's primary business revolves around extracting oil and natural gas from two key geological formations in South Texas: the Eagle Ford Shale and the Austin Chalk. The Eagle Ford Shale is a layer of rock rich in organic material, formed millions of years ago from ancient marine life. The Austin Chalk is another rock layer, primarily composed of calcium carbonate, known for its natural fractures that can help oil and gas flow. These formations are deep underground, and companies like Magnolia use advanced techniques to access and extract the valuable hydrocarbons trapped within them. This segment represents the core of Magnolia's operations and revenue generation.
What management is betting on now
Magnolia's management is focused on a strategy of disciplined capital allocation and returning value to shareholders. This means they aim to generate strong cash flow (the money a company makes after paying its operating costs and investments) by efficiently extracting oil and gas. They prioritize investing in projects that offer high returns and maintaining a strong financial position with low debt (leverage). A key part of their strategy is to return excess cash to investors through dividends (a portion of profits paid to shareholders) and stock buybacks (when a company repurchases its own shares). They are not focused on rapid growth for growth's sake, but rather on sustainable, profitable operations.
Price history
How the share price has moved
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Earnings history
Last 8 quarters — what happened
Click any quarter to read the call summary and what the numbers say.
Revenue
$478.81M
Net income
$181.78M
Diluted EPS
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Operating cash flow
$384.03M
Free cash flow
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Sources
Revenue
$358.51M
Net income
$99.83M
Diluted EPS
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Operating cash flow
$197.62M
Free cash flow
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Revenue
$317.63M
Net income
$68.75M
Diluted EPS
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Operating cash flow
$208.40M
Free cash flow
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Revenue
$324.94M
Net income
$75.46M
Diluted EPS
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Operating cash flow
$247.06M
Free cash flow
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Revenue
$318.98M
Net income
$78.12M
Diluted EPS
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Operating cash flow
$198.70M
Free cash flow
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Revenue
$350.30M
Net income
$102.93M
Diluted EPS
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Operating cash flow
$224.49M
Free cash flow
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Revenue
$326.61M
Net income
$85.60M
Diluted EPS
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Operating cash flow
$222.63M
Free cash flow
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Sources
Revenue
$333.13M
Net income
$99.78M
Diluted EPS
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Operating cash flow
$217.89M
Free cash flow
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Is it cheap or expensive?
Fair value $54.22 vs current price $24.10
Wall Street consensus is the average analyst price target: $33.29 (-38.6% lower than our fair-value estimate).
Our most-likely fair value is $54.22 a share — about 125.0% above today's price of $24.10, so the stock currently looks cheap (undervalued).
Is it drowning in debt?
Healthy
Net debt $117.2M. Interest coverage 20.3x.
Net debt
$117.19M
Interest coverage
20.32x
Magnolia Oil & Gas Corporation's profit covers its interest bill about 20.3 times over. which is stronger than most peers shown here.
Healthy
Worse cushion
Baseline
Better cushion
MGY
BASELINE
Magnolia Oil & Gas Corporation
Total debt $413.13M Interest coverage 20.32x This is the baseline the peer rows are being compared against.
Total debt $11.89B Interest coverage 7.76x -62% vs MGY Carries about 2.6x less debt cushion than MGY.
Total debt $8.25B Interest coverage 30.85x +52% vs MGY Carries about 1.5x more debt cushion than MGY.
Total debt $4.32B Interest coverage 5.69x -72% vs MGY Carries about 3.6x less debt cushion than MGY.
Total debt $1.50B Interest coverage 2.35x -88% vs MGY Carries about 8.6x less debt cushion than MGY.
Total debt $4.62B Interest coverage 9.91x -51% vs MGY Carries about 2.0x less debt cushion than MGY.
What you should know
The case for and against MGY
3 Rewards
2 Risks
Rewards
-
Revenue grew 12.8% last year.
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Returns 20.9% on equity, ahead of 66% of its peers.
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Free cash flow was positive in 4/10 years.
Risks
-
Operating margin compressed from 63.4% to 50.7% over 3 years.
-
Stock trades 5.4% above its 5-year average P/E.
The numbers
All the key metrics, grouped by purpose
Tap any ? icon to learn what it means.
Valuation
How expensive the stock looks
P/E (TTM)
10.57x
Forward P/E
8.07x
P/B
2.04x
P/S
4.47x
EV/EBITDA
5.67x
PEG ratio
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Profitability
How much profit each dollar creates
Gross margin
82.2%
Operating margin
50.7%
Net margin
28.8%
ROE
20.9%
ROA
11.8%
Health
Liquidity and balance-sheet strength
Debt / equity
0.19x
Current ratio
1.58x
Quick ratio
1.57x
Total debt
$413.13M
Total cash
$295.94M
Growth
How the business has been compounding
Revenue TTM
$1.48B
Revenue 5Y CAGR
5.0%
EPS TTM
2.28
EPS 5Y CAGR
-28.4%
Cash flow
How much cash the business throws off
Operating CF TTM
$1.04B
Free CF TTM
$409.16M
FCF margin
27.6%
Dividend
Shareholder payout
Yield
2.7%
Payout ratio
27.6%
Last ex-div date
2026-08-10