Diamondback Books Better-than-Expected Q3 Profit, Boosts Dividend

Diamondback Energy, Inc. (FANG) has reported better-than-expected third-quarter 2021 earnings. The company has also increased its common stock dividend.

The Texas-based energy company posted adjusted earnings of $2.94 per share, which surpassed the Street’s estimate of $2.76 per share. Diamondback recorded adjusted earnings of $0.62 per share in the same quarter last year.

Total production stood at 239,761 BO per day, up 41% year-over-year. Permian Basin production was 223,000 BO per day.

Diamondback reported revenues of $1.91 billion, compared to $720 million in the same quarter last year.

The company’s adjusted EBITDA came in at $1.1 billion, more than double on a year-over-year basis. Additionally, capital expenditures stood at $391 million, up 39.1% year-over-year. Free cash flow increased significantly to $740 million. (See Diamondback stock charts on TipRanks)

Capital Deployment

During the quarter, the company repurchased 268,291 shares of common stock at an average price of $82.02.

Diamondback’s board of directors announced an increased annual cash dividend of $2 per share of the company’s common stock, up 11.1% from the prior payout of $1.80. The new quarterly dividend of $0.50 per share will be paid on November 18 to shareholders of record as of November 11. The company’s annual dividend of $2 per share reflects a dividend yield of 1.8%.

Guidance

The CEO of Diamondback, Travis Stice, commented, “As we move into 2022, we are still seeing excess oil supply and varying demand recovery profiles across the globe. As such, we remain committed to capital discipline and our plan to return excess Free Cash Flow to our stockholders…By keeping our oil production flat in 2022, we expect to be in a position to maximize Free Cash Flow, grow our dividend, further pay down debt and overall return more capital to stockholders.”

For 2021, the company projects oil production to be in the range of 222 million BO per day to 223 million BO per day. Total capital expenditures are anticipated in the range of $1.49 billion to $1.53 billion.

Wall Street’s Take

Diamondback shares have exploded almost 303% over the past year and the stock scores a Strong Buy consensus rating based on 15 Buys versus 1 Hold. The average Diamondback price target of $128.75 implies 15.36% upside potential to current levels.

Smart Score

Diamondback scores a “Perfect 10” from TipRanks’ Smart Score rating system, indicating that the stock has strong potential to outperform market expectations.