Matador Resources Company (MTDR): what the price assumes

boothcheck covers Matador Resources Company (MTDR) but does not put one priced-in number on it: here the defensible answer is the evidence rather than a point estimate. boothcheck publishes no house fair value, target price, or buy/sell rating. Narrative composed 2026-06-27.

Generated: 2026-08-10 · Exported: 2026-08-12 · Source: https://boothcheck.com/report/MTDR

Headline

What The Price Assumes (Inversion)

The assumption today's price embeds, recovered by inverting the valuation.

The operating-margin figure is value-band context at year 9: derived from the framework's value band, a separate calculation — not part of the priced-in solve.

The price sits below what even a 5%/yr operating-profit decline would warrant; the inversion reports a bound, not a solved growth path.

Solve inputs: computed at a 8.9% cost of capital with 4% terminal growth over a 5-year stage.

How unusual the bet is: within-range (limited comparison data)

Valuation X-Ray

The price is supported by asset-based and earnings-power and relative-multiple value. A value/asset-supported name, not a pure growth bet.

How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.

Families that justify the price: Asset, Earnings, Relative

The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 6.2%); the inversion above states its own rate.

Per-Model Detail (n=14)

Solvency

Bullet Takeaways

• Matador is an oil-weighted Delaware Basin producer that pairs its drilling with a midstream business, the San Mateo joint venture it owns 51% alongside partner Five Point, giving it control over its own gathering and processing.
• The biggest risk is the commodity itself: the stock trades around 9x operating income and near book value, a discount that reflects the market's reluctance to capitalize oil-cycle earnings, and the price moves with crude regardless of how well the company drills.
• Watch the back-half capital spending, which management plans to reduce after front-loading drilling, and the path of oil prices, the single variable with the most leverage on the thesis.

Bull Case

Read Matador for what it is at this stage: a mature, oil-weighted shale producer that has built scale and self-sufficiency in the Delaware Basin, the most economic part of the Permian. The company is no longer a small wildcatter; it produces over 200,000 barrels of oil equivalent a day, and the recent quarter showed production of 18.7 million BOE, up 5% year over year, including roughly 120,000 barrels of oil daily. At this stage the thesis is not exploration upside but execution: drilling efficient wells in known rock, controlling costs, and converting production into cash flow. Adjusted EBITDA of $577 million in the quarter shows the cash engine is intact even with revenue softer than expected.

The differentiator is the integrated midstream business. Matador owns 51% of the San Mateo joint venture, with partner Five Point holding the rest, and the 10-K details San Mateo's gathering, processing, and NGL pipeline connections, including at the Black River Processing Plant. Owning the gathering and processing infrastructure around its own acreage gives Matador control over takeaway capacity and a second, fee-based revenue stream that is less exposed to commodity swings than the wellhead. That is a structural advantage most pure-play E&Ps lack, and it is part of why the value methods support the stock.

The valuation itself is the bull case in numbers. The stock trades near book value of about $45 per share and at roughly 9x operating income, a multiple so low that the asset-value, earnings-power, and relative-multiple methods all sit at or above the price. The earnings-power lens, valuing normalized through-cycle profit, lands far above the price. Management has emphasized capital discipline, funding its program without external capital and planning to reduce spending in the back half of the year after front-loading drilling, and the company pays a growing dividend. The bull case is a well-run, integrated Permian producer trading at a trough-like multiple with a midstream cushion the market under-credits.

Bear Case

The bear case is the one external variable that overrides everything else: the price of oil. Matador can drill the best wells in the Delaware Basin and still see its earnings swing violently with crude, because a commodity producer is a price-taker. The 10-K is blunt about the macro exposure, warning that adverse global conditions can "increase volatility in the price and demand for oil and natural gas" and disrupt the takeaway and processing capacity the business depends on. The filing also notes the company has experienced "future periods of negative pricing for natural gas as we have experienced historically, including in 2024", a reminder that Permian gas, a byproduct of oil drilling, sometimes sells for less than nothing when takeaway is constrained. The low multiple the bull case celebrates is the market pricing exactly this: that capitalized oil-cycle earnings are not worth a premium, because the next downturn will take them away.

The most recent quarter showed how the commodity exposure bites even in a decent operating period. Despite production growth, Matador posted a GAAP net loss of $35.9 million, driven largely by a $255.5 million unrealized loss on derivatives. That loss is a non-cash mark on the company's hedges rather than an operating failure, but it illustrates the volatility embedded in the business: earnings can flip from a large profit a year earlier to a loss on price moves alone. Revenue also missed expectations, coming in at $818.7 million.

The balance sheet is the structural constraint that turns commodity risk into real danger. Net debt sits near $3.4 billion against almost no liquid cash on hand, with operating income covering interest only 4.2 times, the thinnest coverage among the names in this batch. Matador took on that leverage to acquire acreage and build out San Mateo, and it works while oil prices hold. But a sustained downturn compresses the cash flow that services the debt, and an E&P with elevated leverage has far less room to weather a low-price stretch than one running net cash. The return on invested capital sits well below the cost of capital on a trailing basis, which is why the stock trades near book. The bet is that oil prices stay supportive long enough for the asset value and the deleveraging to play out, and that is a bet on a variable the company does not control.

Valuation

Matador is a value-supported name, and the price tells you the market is pricing the bottom of a cycle rather than the middle of one. At roughly $49.57 (June 27, 2026), the stock trades at about 9x operating income, a multiple so low that the price sits below what even a 5%-a-year decline in operating profit would warrant. That is the signature of a commodity producer the market refuses to capitalize at a normal multiple, because it expects the earnings to be cyclical rather than durable. The price also sits right around book value of about $45 per share.

The valuation methods cluster supportively, which is unusual and informative. The asset-value lens lands at or just above the price, with Simple Excess Return near $42 and Residual Income near $41, anchored to a book value the oil-and-gas reserves and midstream assets back. The earnings-power lens, valuing normalized through-cycle operating income, lands far above the price, near $102, which captures what Matador earns in an average year rather than a weak one. The peer-multiple lens lands above the price too, with EV/EBITDA Relative near $74 at a 6x sector multiple. The methods that look weak, the growth-extrapolation and ROIC-justified approaches, are the ones penalizing a single trough year's returns, and they should be read with that in mind. The honest read is a stock priced below where its assets and through-cycle earnings power suggest.

The peer cohort is a loose fit and worth flagging: the oil-and-gas group here includes EQT, CNX, and Ovintiv, several of which are gas-weighted Appalachian producers, while Matador is oil-weighted Permian, so the sector multiple is a rough anchor rather than a clean comp. The decisive input is solvency, not the multiple. Net debt of about $3.4 billion with interest covered only 4.2 times is meaningful leverage for a price-taker, and it is the variable that converts an ordinary oil downturn into a real problem. The value case rests on oil prices holding while Matador's cash flow pays down debt and the midstream business adds a steadier layer of earnings the wellhead cannot. That is the assumption a buyer is underwriting: a supportive commodity backdrop long enough for the deleveraging to compound.

Catalysts

The first-quarter 2026 results, reported May 7, were a mixed but operationally solid print. Matador beat on adjusted earnings, with EPS of $1.53 against a $1.34 forecast, while missing on revenue at $818.7 million. Production rose 5% year over year to 18.7 million BOE, and adjusted EBITDA reached $577.2 million. The headline GAAP net loss of $35.9 million was driven almost entirely by a $255.5 million unrealized derivative mark, a non-cash hedging adjustment rather than an operating shortfall.

Capital allocation is the forward catalyst management is steering. The company maintained $428 million of capital expenditure guidance, with more than half of the drilling concentrated in the first half and a planned reduction in the back half, and the CEO emphasized funding the program without external capital. That back-half spending cut, if it lands as planned, frees up cash flow for debt reduction and the dividend, which the company declared in late April. The shape of the spending year is the operational lever most within management's control.

The overriding catalyst, as always for an E&P, is the oil price. Analyst sentiment is constructive, with a median price target near $65 and several firms maintaining Outperform ratings in the $74 to $79 range, all well above the current price, reflecting a view that the stock is cheap on the assets if crude cooperates. The next quarterly print, and more so the path of oil prices through the year, are what determine whether that gap closes.

Peer Cohorts (Per Segment, With Filing Citations)

Core business (reported)

• OVV (Ovintiv Inc.)
• FY2025 10-K: …resolution is uncertain. While we believe that our current provision for income taxes is adequate, certain tax authorities may reassess our taxes and such reassessments may be material. General Risks The oil and natural gas industry is highly competitive and many of our competitors have available resources in excess…
• FY2025 10-K: Form 10-K. COMPETITION The Company's competitors include national, integrated and independent oil and natural gas companies, as well as oil and natural gas marketers and participants in other industries supplying energy and fuel to industrial, commercial and individual consumers. All aspects of the oil and natural gas…
• DVN (DEVON ENERGY CORP/DE)
• FY2025 10-K: …materials, services and personnel required to explore, develop and operate properties, such as drilling rigs, well materials and oilfield services. The rising costs and scarcity caused by this competitive pressure will generally increase during periods of higher commodity prices and can be further exacerbated by…
• FY2025 10-K: …our strategic priorities of moderating production growth, emphasizing capital and operational efficiencies, optimizing reinvestment rates to maximize free cash flow, maintaining low leverage, delivering cash returns to our shareholders and pursuing operational excellence. Our recent performance highlights for these…
• OXY (OCCIDENTAL PETROLEUM CORPORATION)
• FY2025 10-K: …of its gathering, processing, transportation, storage and terminal commitments and by providing the oil and gas segment access to domestic and international markets. To generate returns, the segment evaluates opportunities across the value chain and uses its assets to provide services to Occidental's subsidiaries, as…
• FY2025 10-K: …and gas segment focuses on long-term value creation in the key performance indicators noted above of total spend per barrel, field operability, daily production, and leadership through our HSE and sustainability initiatives. In each core operating area, the Company's operations benefit from scale, technical…
• EQT (EQT Corporation)
• FY2025 10-K: …greater capital resources and access to, or control of, larger natural gas supplies. Competition for our natural gas transmission and storage business is based primarily on rates, customer commitment levels, timing, performance, commercial terms, reliability, service levels, location, reputation and fuel…
• FY2025 10-K: …when allocating capital and personnel to the Company's reportable segments. For the Company's Transmission segment, the CODM also reviews equity earnings recognized from, and the carrying value of, the Company's investment in the MVP Joint Venture. Substantially all of the Company's operating revenues and assets are…
• CRK (COMSTOCK RESOURCES, INC.)
• FY2025 10-K: …other industries in supplying the energy and fuel requirements of industrial, residential and commercial consumers along with electric generator customers. 14 COMSTOCK RESOURCES, INC. Our natural gas production is primarily sold under contracts with various terms and priced on first of the month index prices or on…
• FY2025 10-K: …of approximately 1.7 Bcf per day in 2026 on the long-haul pipelines. To the extent we are not able to deliver the contracted natural gas volumes, we may be responsible for the transportation costs. Competition The natural gas and oil industry is highly competitive. Competitors include major oil companies, other…
• BKV (BKV CORPORATION)
• FY2025 10-K: …and personnel during the spring and summer months, which could lead to shortages and increase costs or delay our operations. Similarly, winter months may bring about delays in operational capabilities and efficiency of execution related to new and existing supply. Competition The oil and gas industry is very…
• FY2025 10-K: …assets. As a result, after a sale, we may remain secondarily liable for the obligations guaranteed or supported to the extent that the buyer of the assets fails to perform these obligations. We may be unable to compete effectively with larger companies, which may adversely affect our ability to generate sufficient…
• EXE (EXPAND ENERGY CORPORATION)
• FY2025 10-K: …ended December 31, 2025 or 2023. Competition We compete with both major integrated and other independent natural gas and oil companies, as well as pipeline marketing affiliates and other marketing companies, in all aspects of our business to explore, develop and operate our properties and market our production. Some…
• FY2025 10-K: …in reduced demand for our products or stimulate demand for alternative forms of energy that do not rely on combustion of fossil fuels. For more information, see our risk factor "Increasing attention to sustainability matters and our ability to achieve and maintain sustainability certifications, goals and commitments…
• CRC (California Resources Corp)
• FY2025 10-K: …includes operating lease costs and asset impairment. (b) Other profit or loss includes the margin we earn from marketing activities and the margin we earn on sales of electricity from our Elk Hills power plant to customers. (c) Unallocated amounts include net gain from commodity derivatives, net loss on natural gas…
• FY2025 10-K: Segment operating revenues 2,967 - 2,967 Other revenues and income (a) 749 749 Total operating revenues $ 3,669 (a) Other revenues and income includes net gain from commodity derivatives, revenue from marketing of purchased commodities, electricity sales and unallocated interest and other revenue. 136 Year ended…

Methodology Note

• Priced-in inversion: the valuation is inverted on the current price to recover the operating-income growth, duration, and steady-state margin the price embeds (ROE for financials, FFO growth for REITs).
• Valuation x-ray: the valuation models, grouped into four families (asset, earnings, relative, growth). Each model is expressed as a price/FV ratio (distance from price), not a point fair-value estimate. The spread across families is the disagreement.
• Solvency: net cash/debt, net-debt-to-NOPAT, interest coverage, and share-count CAGR from EDGAR financials (net debt / FFO and fixed-charge coverage for REITs; regulatory-capital framing for financials).
• Peer cohorts: per-segment comparables with deep-linkable SEC filing citations.

Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.