Is there any built-in macro series for natural gas prices?
My value based system bought a natural gas producer based on most recent earnings. But since natural gas prices recently plummeted, the future revenue at today’s prices is much lower. I would like to adjust for this price drop.
Would it be possible to use UNG as an approximation?
Thanks, that’s a great idea!
Upon further review, “Fossil Fuel Exploration and Production” includes both oil and gas.
But oil prices have remained stable these past few months while natural gas prices are down 73% since this past summer. This means that in order to adjust revenues for changes in prices, I would need to create a series with the tickers and the % of revenue from oil vs natural gas. I am not sure if it’s worth it.
UNG is only natural gas future no oil. Is your system telling you to buy an oil and gas exploration and production company?
Yes. But it’s based on looking at the rear-view mirror of past profits at a different price point.
Do you mind sharing what the stock was? Perhaps it’s big enough to have sufficient analyst coverage that you could more heavily factor in EPS estimates which presumably would be decreasing for future quarters/years. Those analysts are already modeling discounted cash flows from future natural gas prices, percent of revenue tied to gas, etc. in Excel, and hopefully you should be able to leverage that.
EQT. Natural Gas producer. Selling at 4x FCF with 60% of next years gas locked in at prices of $5.50 or so.