ASX Energy Industry: A Deep Dive Into TerraCom Limited (ASX:TER)

Oil and gas companies are typically trading at a PE of 12.53x, in-line with the Australian stock market PE of 17.3x. This means the industry, on average, is fairly valued compared to the wider market – minimal expected gains and losses from mispricing here. Furthermore, the industry returned a similar 9.69% on equities compared to the market’s 11.37%, potentially illustrative of a turnaround. On the stock-level, TerraCom is trading at a PE ratio of 10.75x, which is relatively in-line with the average oil and gas stock. In terms of returns, TerraCom generated 52.36% in the past year, which is 42.66% over the oil and gas sector.

Next Steps:

The energy sector’s below-market growth and average valuation hardly makes it an exciting investment case. If you’re looking for a high-growth stock with potential mispricing, it seems like energy companies like TerraCom isn’t the right place to look. However, before you make a decision on the stock, I suggest you look at TerraCom’s fundamentals in order to build a holistic investment thesis.

1. Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
2. Historical Track Record: What has TER’s performance been like over the past? Go into more detail in the past track record analysis and take a look at the free visual representations of our analysis for more clarity.
3. Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of TerraCom? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!

To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.

The author is an independent contributor and at the time of publication had no position in the stocks mentioned.