Range Resources (RRC) Stock Still Looks Undervalued On Its 106% Five Year Run

Range Resources has delivered a strong multi year share price performance, yet the recent pullback leaves an obvious question for you as a shareholder or potential buyer. Is the current US$39.10 price properly supported by the cash flows the business is expected to generate over time?

• Range Resources has returned 106.1% over the past 5 years, which puts real weight on whether that share price journey is still aligned with the cash that can ultimately be taken out of the business.
• The company’s ability to turn its assets and capital spending into reliable free cash flow can influence how investors think about the timing and durability of those cash streams.
• Prefer to judge Range Resources on earnings? See what Range Resources's 10.6x P/E says about the price.

The issue now is whether that recent share price of US$39.10 is in line with the intrinsic value suggested by Range Resources’ cash flows.

If you want to stress test the same cash flow question beyond Range Resources, it can help to scan a wider field using 29 high quality undervalued stocks.

Is Range Resources a Bargain on Cash Flow?

The Discounted Cash Flow (DCF) model here is built around the cash Range Resources can return to shareholders over time. Latest twelve month free cash flow sits at about $604.6m, and the projection work assumes this pool of cash stays in positive territory rather than flipping back into heavy outflows.

Analysts feeding into the DCF expect free cash flow to remain in the hundreds of millions of dollars through the next decade, then fade to more modest growth estimates beyond the explicit forecast years. That pattern points to a business that the model treats as mature and cash generative rather than one needing aggressive expansion assumptions to justify today’s US$39.10 share price. This is why the DCF projections put Range Resources' estimated intrinsic value substantially above the current share price. Find out what Range Resources could be worth using our Discounted Cash Flow (DCF) estimate.

The Range Resources Narrative: What Would Justify Today's Price?

Simply Wall St Narratives for Range Resources pick up where that valuation question leaves off. They spell out what growth, margin and earnings paths would need to hold for Range Resources' share price to be worth materially more or materially less than today. Rather than centering on a single multiple or model output, each narrative lays out the assumptions behind its view of fair value so you can compare those expectations with the company’s actual results as they emerge.

Views on Range Resources split between those who see a cash rich operator tied into rising gas demand and those who focus on long term demand and policy risk.

Bull case: 14% undervalued

"Ongoing efficiency gains in drilling and completions and sustained reductions in per-unit well costs are enabling Range to increase production guidance and lower capital spending..."

Discover why this Narrative puts Range Resources at 14% undervalued.

Bear case: 6% overvalued

"Persistent overcapacity in U.S. shale gas production, combined with the risk of supply gluts from productivity gains, may keep domestic prices suppressed..."

Explore why this Narrative puts Range Resources at 6% overvalued.

For Range Resources, the share price is only one piece of the decision

Who steers Range Resources, how their pay is structured, and whether those incentives push them toward the same outcomes you want as a shareholder is a separate question that deserves its own close look. See who runs Range Resources and how they are paid.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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