AMPY

We rate Amplify Energy Corp. (AMPY) as a Reduce with a composite score of 41.8/100 at a current price of $5.45. The quantitative profile shows weakness across multiple dimensions, suggesting limited upside potential and elevated risk of underperformance relative to peers over the next 12 months.

The rating is primarily driven by strength in quality (43th percentile) and stability (35th percentile), which together account for the majority of the composite score. Offsetting weakness in value (27th percentile) and momentum (30th percentile) tempers our overall conviction. We assign a No Moat rating (33/100), Medium uncertainty, and Poor capital allocation.

Key items to watch: momentum to confirm whether the current price trend has legs; valuation compression risk if growth disappoints. Any material change in these dynamics could warrant a reassessment of our rating. The moat trend is stable, which suggests the competitive landscape is stable for now.

Amplify Energy Corp. holds a top-quartile position (#0 of 50) within the Mining sector, based on our composite quantitative scoring across quality, value, momentum, and stability factors. The composite score of 41.8/100 places it at rank #3311 in our full 7,333-stock universe. At $212M in market capitalization, Amplify Energy Corp. is a small-cap player in the Mining space, which limits certain scale advantages but may allow for more agile strategic execution.

Revenue contraction of -16% combined with momentum at the 30th percentile paints a cautious picture of the near-term business outlook. The market appears to be pricing in continued challenges, and a catalyst for reversal is not clearly visible from current data.

The margin cascade tells an important story: gross margins of 93% (+50.1pp vs sector) narrow to operating margins of 5% (-7.3pp vs sector) and net margins of 0.5%, yielding a gross-to-net conversion rate of 1%. The significant margin erosion from gross to net suggests elevated operating expenses, high interest costs, or other structural drags that warrant monitoring.

At a current price of $5.45, Amplify Energy Corp. is trading at a premium to fundamental value. Our value factor score of 27/100 reflects a composite assessment across multiple valuation metrics including price-to-earnings, price-to-book, EV/EBITDA, and price-to-sales ratios relative to both sector peers and the broader market. The premium valuation implies the market is pricing in significant future growth or quality improvements that are not yet fully reflected in current fundamentals.

The stock currently trades at a P/E of 104.6x (a 662% premium to the sector median of 13.7x), EV/EBITDA of 15.8x (at a premium), P/B of 0.6x, P/S of 0.8x. The above-sector P/E multiple suggests the market is pricing in superior growth or quality, which our analysis finds only partially justified by current fundamentals.

We assign a Medium uncertainty rating to Amplify Energy Corp.. The stock presents a balanced risk profile: below-average price stability (35th percentile) and elevated valuation multiple (P/E 104.6x) that leaves limited margin for error. While not risk-free, the core business fundamentals are adequate to withstand moderate economic stress, and the range of potential outcomes around our fair value estimate is manageable.

Specific risk factors that inform our assessment include: below-average price stability (35th percentile); elevated valuation multiple (P/E 104.6x) that leaves limited margin for error; the combination of leverage (86% D/E) and thin margins (0.5% net) amplifies downside risk. Each of these factors independently widens the distribution of potential outcomes, and in combination they create a risk profile that demands careful position sizing. The stability factor at the 35th percentile and quality factor at the 43th percentile provide a quantitative summary of the overall risk landscape.

Key risk mitigants include: healthy gross margins of 93% provide a buffer against cost pressures. These factors partially offset the identified risks and provide downside protection in adverse scenarios. On balance, the risk-reward profile is favorable for long-term investors.

We rate Amplify Energy Corp.'s capital allocation as Poor. Key concerns include low returns on equity (0.6%), weak asset returns (ROA 0.3%). Exemplary capital allocators generate ROE above 20% and maintain conservative leverage — Amplify Energy Corp. significantly underperforms these benchmarks, raising questions about management's ability to create shareholder value.

Investors should scrutinize management's reinvestment decisions and balance sheet trajectory before committing capital. Poor capital allocation often compounds over time: overlevered balance sheets limit strategic flexibility, while low returns on capital destroy shareholder value. We would need to see sustained improvement in profitability metrics and balance sheet discipline before considering an upgrade.

In summary, Amplify Energy Corp. receives a Reduce rating with a composite score of 41.8/100 (rank #3311 of 7,333). Our quantitative framework assigns a No Moat (33/100, trend: stable), Medium uncertainty, and Poor capital allocation. The average factor score across quality, value, momentum, stability, and investment is 33/100.

Our analysis does not support a constructive view on Amplify Energy Corp. at this time. The combination of limited competitive advantages, medium uncertainty, and poor capital allocation suggests unfavorable risk-reward at current levels. We recommend investors avoid new positions and existing holders consider reducing exposure.