MATADOR RESOURCES COMPANY
MTDR
$53.01
-0.92%
Matador Resources Company is an independent energy company engaged in the exploration, development, production, and acquisition of oil and natural gas resources, with a primary focus on U.S. shale and unconventional plays, and it also operates a midstream segment that supports its exploration and production activities. The company is a mid-cap exploration and production (E&P) operator with a differentiated integrated model that combines upstream drilling with owned midstream infrastructure, allowing it to capture additional margin and control costs. The current investor narrative centers on the company's ability to generate free cash flow and return capital to shareholders, as evidenced by its recent initiation of a dividend and opportunistic share repurchases, while also managing commodity price volatility and integrating recent acquisitions. Recent headlines highlight the sensitivity of the stock to geopolitical events, such as the Strait of Hormuz reopening that triggered a sharp oil price decline, underscoring the macro-driven nature of the investment case.…
MTDR
MATADOR RESOURCES COMPANY
$53.01
Related headlines
Investment Opinion: Should I buy MTDR Today?
Based on the synthesis of data, MTDR warrants a Buy rating. The core thesis is that the stock is significantly undervalued relative to its earnings power and cash flow generation, with a forward PE of 5.85x and an EV/EBITDA of 3.58x, while analysts have a strong buy consensus and an average target price of $69.90, implying 30.65% upside. The company's ability to generate substantial free cash flow ($569.16 million in Q2 2026) and return capital to shareholders via a 3.09% dividend yield supports the bullish case.
Supporting evidence includes: 1) Revenue growth of 28.16% YoY in Q2 2026, driven by oil production; 2) Net margin of 32.93% in Q2 2026, a sharp turnaround from the Q1 loss; 3) Forward PE of 5.85x, which is less than half the industry average of 10-15x; 4) Free cash flow of $569.16 million in Q2 2026, providing flexibility for debt reduction and shareholder returns. Additionally, the PB ratio of 0.93x means the stock trades below book value, offering a margin of safety.
However, risks include oil price volatility, as evidenced by the Q1 2026 loss, and liquidity concerns with a current ratio of 0.792. The rating would change to Hold if oil prices fall below $60 per barrel and remain there, or if free cash flow turns negative. Conversely, it would upgrade to Strong Buy if oil prices recover above $80 and the company sustains its growth trajectory. Relative to its history and peers, MTDR appears undervalued, but the market is pricing in significant commodity risk.
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MTDR 12-Month Price Forecast
MTDR presents a compelling value opportunity with strong cash flow generation and a clear path to re-rating if oil prices stabilize. The stock's deep discount to peers and historical multiples, combined with a strong buy consensus, suggests significant upside potential. However, the investment case is heavily dependent on oil prices, which are inherently volatile and subject to geopolitical shocks. The recent pullback may have created an attractive entry point, but investors should be prepared for continued volatility. I would upgrade to high confidence if oil prices show sustained recovery above $75, and downgrade to neutral if oil falls below $60 for an extended period.
Wall Street consensus
Most Wall Street analysts maintain a constructive view on MATADOR RESOURCES COMPANY's 12-month outlook, with a consensus price target around $69.90 and implied upside of +31.9% versus the current price.
Average Target
$69.90
0 analysts
Implied Upside
+31.9%
vs. current price
Analyst Count
—
covering this stock
Price Range
$59 - $101
Analyst target range
MTDR is covered by 20 analysts, with a consensus recommendation of "strong_buy" and a recommendation mean of 1.43 (where 1 is a strong buy and 5 is a strong sell). The average target price is $69.90, which implies an upside of 30.65% from the current price of $53.50. The high target is $101.00, suggesting a potential upside of 88.79%, while the low target is $59.00, still implying a 10.28% upside. The consensus is overwhelmingly bullish, with no sell ratings, and the recent institutional ratings show mostly Overweight or Buy ratings, with a notable upgrade from Wells Fargo on 2026-09-02 from Equal Weight to Overweight. The wide target range from $59 to $101 reflects high uncertainty, but the fact that even the low target is above the current price suggests that analysts see the stock as undervalued. The high target of $101 likely assumes a recovery in oil prices, successful integration of acquisitions, and continued production growth, while the low target of $59 may price in a more conservative oil price environment and potential execution risks. The estimated EPS average for the next year is $9.65, which would put the forward PE at 5.54x, further supporting the undervaluation thesis. The strong buy consensus and recent upgrades indicate that analysts are becoming more confident in the company's prospects, despite the recent stock price weakness.
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Bulls vs Bears: MTDR Investment Factors
The bull case for MTDR is currently stronger, driven by deep valuation discounts, robust free cash flow, and overwhelmingly positive analyst sentiment. The stock trades at a fraction of its historical multiples and the broader sector, while revenue growth and profitability have rebounded sharply in Q2 2026. However, the bear case is not without merit: oil price volatility remains the dominant risk, as shown by the Q1 2026 loss and the recent 14% crude plunge on geopolitical news. The most critical tension is whether oil prices can stabilize or rise, allowing MTDR to sustain its earnings and re-rate; if oil remains weak, the valuation discount may persist or widen. Given the strong buy consensus and low forward PE, the risk/reward appears favorable, but investors must accept commodity price risk.
Bullish
- Deep Value Multiples: MTDR trades at a trailing PE of 6.96x and forward PE of 5.85x, a 30-50% discount to the industry average of 10-15x. The EV/EBITDA of 3.58x is well below the historical range of 9.33x-18.87x, suggesting significant undervaluation.
- Strong Revenue Growth: Q2 2026 revenue grew 28.16% YoY to $1.186 billion, driven by oil revenues of $1.126 billion. This growth reflects successful production increases and acquisition integration.
- Robust Free Cash Flow: Q2 2026 free cash flow was $569.16 million, a massive improvement from $11.75 million in Q1 2026. TTM FCF stands at $625.84 million, supporting capital returns and debt reduction.
- Analyst Consensus Strong Buy: 20 analysts rate MTDR a strong buy with a mean recommendation of 1.43. The average target price of $69.90 implies 30.65% upside, and even the low target of $59.00 offers 10.28% upside.
Bearish
- Oil Price Volatility: MTDR's profitability is highly sensitive to oil prices, as evidenced by a net loss of $35.87 million in Q1 2026 when oil prices dipped. The recent Strait of Hormuz reopening triggered a 14% crude plunge, highlighting macro-driven risk.
- Liquidity Concerns: The current ratio of 0.792 indicates current liabilities exceed current assets, and cash on hand is only $90.92 million. This tight liquidity could strain operations if oil prices fall sharply.
- Recent Underperformance: MTDR has declined 10.20% over the past month, underperforming the S&P 500 by 10.79 percentage points. The 6-month relative strength is -32.29%, indicating significant weakness versus the market.
- High Short Interest: The short ratio of 7.19 suggests that short sellers are active, which could lead to downward pressure if negative catalysts emerge. However, it also sets up potential short squeezes.
MTDR Technical Analysis
MTDR is currently trading at $53.50, which is 80.1% of its 52-week range of $37.14 to $66.84, indicating a mid-to-upper range positioning. The stock has gained 23.41% over the past year, significantly outperforming the S&P 500's 15.01% gain, but it has pulled back 14.94% over the past six months, suggesting a loss of momentum. The 1-year uptrend remains intact, but the recent pullback places the stock in a consolidation phase, with the current price below the midpoint of the 52-week range when considering the high of $66.84 and low of $37.14. Over the past month, MTDR has declined 10.20%, while the S&P 500 gained 0.59%, resulting in a relative strength of -10.79%, indicating significant underperformance. The 3-month change is +6.62%, showing that the stock had positive momentum earlier but has recently reversed sharply. This divergence between the positive 1-year trend and the negative 1-month trend could signal a temporary pullback or the start of a deeper correction, especially given the 6-month decline of 14.94%. The relative strength versus the S&P 500 over 6 months is -32.29%, highlighting substantial weakness compared to the broader market. Key support is at the 52-week low of $37.14, while resistance is at the 52-week high of $66.84. A breakdown below $50 could accelerate selling pressure, while a breakout above $60 would signal renewed bullish momentum. The stock's beta of 0.788 indicates it is less volatile than the market, which may appeal to risk-averse investors but also means it may lag in strong up markets. The maximum drawdown of -29.53% over the past year reflects significant downside risk, and the short ratio of 7.19 suggests that short sellers are active, potentially leading to squeezes if positive catalysts emerge.
Beta
0.97
0.97x market volatility
Max Drawdown
-29.5%
Largest decline past year
52-Week Range
$37-$67
Price range past year
Annual Return
+17.7%
Cumulative gain past year
| Period | MTDR Return | S&P 500 |
|---|---|---|
| 1m | -10.4% | +0.6% |
| 3m | +1.7% | +3.6% |
| 6m | -12.1% | +14.6% |
| 1y | +17.7% | +15.8% |
| ytd | +22.3% | +13.6% |
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MTDR Fundamental Analysis
MTDR's revenue for the most recent quarter (Q2 2026) was $1.186 billion, representing a 28.16% year-over-year increase from $925.68 million in Q2 2025. This growth was driven primarily by oil revenues of $1.126 billion, which accounted for the vast majority of total revenue, while natural gas revenues were negative at -$38.84 million, likely due to hedging losses or negative pricing adjustments. The multi-quarter trend shows revenue fluctuating: Q1 2026 was $941.60 million, Q4 2025 was $847.99 million, and Q3 2025 was $915.12 million, indicating some volatility but overall growth. The strong YoY growth suggests the company is successfully increasing production and benefiting from acquisitions, but the reliance on oil revenues makes it vulnerable to commodity price swings. In Q2 2026, MTDR reported net income of $390.65 million, a significant turnaround from a net loss of $35.87 million in Q1 2026, with a net margin of 32.93%. The gross margin for Q2 2026 was 87.57%, up from 47.13% in Q1 2026, though the Q1 figure appears distorted by lower revenue and higher costs. Operating margin was 48.66% in Q2 2026, compared to 33.64% in Q1 2026, showing improved profitability. The company's profitability is highly sensitive to oil prices, as evidenced by the Q1 loss when oil prices likely dipped. The trailing twelve-month (TTM) net margin is 20.76%, and the operating margin is 32.46%, which are healthy for the E&P industry. The balance sheet shows a debt-to-equity ratio of 0.627, which is moderate but higher than some peers, and a current ratio of 0.792, indicating potential liquidity concerns as current liabilities exceed current assets. Free cash flow for Q2 2026 was $569.16 million, a strong improvement from $11.75 million in Q1 2026, and operating cash flow was $937.13 million. The company spent $367.97 million on capital expenditures in Q2 2026, down from $458.80 million in Q1 2026, suggesting disciplined capital allocation. The ROE is 13.42%, and ROA is 5.92%, which are respectable but not exceptional. The company's cash position is $90.92 million, which is relatively low, and it relies on operating cash flow to fund growth and dividends. The dividend yield is 3.09%, and the payout ratio is 21.48%, indicating a sustainable dividend for now.
Quarterly Revenue
$1.2B
2026-06
Revenue YoY Growth
+28.2%
YoY Comparison
Gross Margin
87.6%
Latest Quarter
Free Cash Flow
$625842000.0B
Last 12 Months
Revenue & Net Income Trends (2 Years)
Revenue Breakdown
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Valuation Analysis: Is MTDR Overvalued?
Since MTDR reported positive net income (TTM net income is positive, with Q2 2026 net income of $390.65 million), the PE ratio is the primary valuation metric. The trailing PE is 6.96x, while the forward PE is 5.85x, indicating that the market expects earnings to grow, as the forward multiple is lower than the trailing multiple. The PEG ratio is -0.47, which is negative due to the negative earnings growth rate in the past year, but the forward estimates suggest a turnaround. Compared to the industry average PE for oil and gas E&P, which typically ranges from 10x to 15x, MTDR's trailing PE of 6.96x represents a significant discount of approximately 30-50%. The PS ratio is 1.45x, and the EV/EBITDA is 3.58x, both of which are low compared to the sector, suggesting undervaluation. The PB ratio is 0.93x, meaning the stock trades below its book value, which could indicate a value opportunity or market skepticism about asset quality. Historically, MTDR's PE ratio has ranged from 3.31x to 10.41x over the past three years, with the current 6.96x falling in the middle of that range. The PS ratio has ranged from 5.21x to 11.05x, and the current 1.45x is near the low end, suggesting the stock is cheap relative to its historical sales multiple. The EV/EBITDA has ranged from 9.33x to 18.87x, and the current 3.58x is well below that range, indicating significant undervaluation on an enterprise value basis. This could be due to the recent decline in oil prices or company-specific issues, but if the company can sustain its earnings, the stock may be poised for a re-rating.
PE
7.0x
Latest Quarter
vs. Historical
Mid-Range
5-Year PE Range 3x~10x
vs. Industry Avg
N/A
Industry PE ~N/A*
EV/EBITDA
3.6x
Enterprise Value Multiple
Investment Risk Disclosure
Financial and operational risks for MTDR are primarily tied to its commodity price exposure and liquidity position. The company's current ratio of 0.792 indicates that current liabilities exceed current assets, and with only $90.92 million in cash, it relies heavily on operating cash flow to fund operations and growth. Interest expense of $60.82 million in Q2 2026, while covered by operating income of $577.32 million, could become burdensome if oil prices decline. Additionally, revenue is heavily concentrated in oil, which accounted for $1.126 billion of the $1.186 billion total in Q2 2026, making results highly sensitive to oil price swings. The Q1 2026 net loss of $35.87 million exemplifies this volatility, and any repeat could pressure the balance sheet further.
Market and competitive risks include valuation compression if oil prices remain low, as the stock's low PE may reflect a value trap rather than a bargain. MTDR's beta of 0.788 indicates lower volatility than the market, but this also means it may lag in strong up markets. The recent Strait of Hormuz reopening, which triggered a 14% crude plunge, underscores the geopolitical sensitivity of the investment case. Furthermore, the short ratio of 7.19 suggests that bearish sentiment persists, and any negative operational news could exacerbate selling pressure. The energy sector is also subject to regulatory and environmental risks, though these are not quantified in the provided data.
In a worst-case scenario, a sustained decline in oil prices to levels that caused the Q1 2026 loss could lead to further earnings misses and cash flow deterioration. The 52-week low of $37.14 represents a 30.6% downside from the current price of $53.50, and the maximum drawdown over the past year was -29.53%. If oil prices fall below $60 per barrel and remain there, MTDR could retest its 52-week low, implying a loss of approximately 30% from current levels. Additionally, if the company fails to integrate acquisitions efficiently or faces operational setbacks, the stock could underperform further, with the analyst low target of $59.00 providing little downside protection in a bear scenario.
FAQ
The key risks include: 1) Commodity price risk: Oil revenue dominates, and a price decline can quickly turn profits into losses, as seen in Q1 2026 with a $35.87 million net loss. 2) Liquidity risk: The current ratio of 0.792 indicates potential short-term liquidity constraints, with only $90.92 million in cash. 3) Market sentiment risk: The short ratio of 7.19 shows active short selling, which could pressure the stock. 4) Operational risk: Integration of acquisitions and production execution could disappoint. These risks are ranked with commodity price being the most severe, followed by liquidity and market sentiment.
The 12-month forecast includes three scenarios: Bull case (30% probability) targets $80-$101, driven by oil prices above $80 and earnings beats. Base case (50% probability) targets $65-$75, assuming oil prices stabilize around $70-75 and the stock re-rates toward the analyst average of $69.90. Bear case (20% probability) targets $37-$50, if oil prices fall below $60 and earnings disappoint. The base case is most likely, hinging on oil price stability and continued free cash flow generation. Analysts' average target of $69.90 aligns with the base case, implying 30.65% upside.
MTDR is undervalued based on multiple metrics. Its trailing PE of 6.96x and forward PE of 5.85x are well below the industry average of 10-15x. The EV/EBITDA of 3.58x is far below its historical range of 9.33x-18.87x, and the PS ratio of 1.45x is near the low end of its historical range. The PB ratio of 0.93x means it trades below book value. These metrics suggest the market is pricing in significant commodity price risk and skepticism about earnings sustainability. If the company can maintain its recent performance, the stock could re-rate higher.
MTDR appears to be a good buy for value-oriented investors with a tolerance for commodity risk. The stock trades at a forward PE of 5.85x, significantly below the industry average of 10-15x, and offers a 30.65% upside to the analyst average target of $69.90. The company generated $569.16 million in free cash flow in Q2 2026 and pays a 3.09% dividend yield. However, the biggest downside risk is oil price volatility, as seen in Q1 2026 when a price dip caused a net loss. Therefore, it is suitable for investors who believe oil prices will remain stable or rise, and who can withstand potential drawdowns to the 52-week low of $37.14.
MTDR is suitable for both, but with different considerations. For long-term investors, the company offers a 3.09% dividend yield, strong free cash flow, and a low valuation that could re-rate over years, though commodity price cycles will cause volatility. The beta of 0.788 suggests lower volatility than the market, but the max drawdown of -29.53% in the past year shows significant risk. Short-term traders can capitalize on oil price movements and technical levels, such as support at $50 and resistance at $60. A minimum holding period of 1-2 years is suggested for long-term investors to ride out commodity cycles and benefit from potential multiple expansion.
