CRGY

We rate Crescent Energy Co (CRGY) as a Reduce with a composite score of 41.6/100 at a current price of $10.32. 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 (46th percentile) and value (46th percentile), which together account for the majority of the composite score. Offsetting weakness in momentum (17th percentile) and investment (34th percentile) tempers our overall conviction. We assign a No Moat rating (36/100), High uncertainty, and Standard capital allocation.

Key items to watch: momentum to confirm whether the current price trend has legs; sustainability of the current growth rate. 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.

Crescent Energy Co 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 41.6/100 places it at rank #3338 in our full 7,333-stock universe. At $2.3B in market capitalization, Crescent Energy Co is a mid-cap player in the Mining space, which limits certain scale advantages but may allow for more agile strategic execution.

Revenue is growing at 33%, though momentum at the 17th percentile suggests the market has not yet fully recognized this trajectory. This potential disconnect between fundamental improvement and market recognition could represent an opportunity for patient investors if the growth trend persists.

The margin cascade tells an important story: gross margins of 89% (+45.8pp vs sector) narrow to operating margins of 7% (-4.8pp vs sector) and net margins of 4.2%, yielding a gross-to-net conversion rate of 5%. 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 $10.32, Crescent Energy Co is trading near fair value based on current fundamentals. Our value factor score of 46/100 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. Valuation metrics are mixed, with no strong signal of mispricing in either direction.

The stock currently trades at a P/E of 23.1x (a 68% premium to the sector median of 13.7x), EV/EBITDA of 24.5x (at a premium), P/B of 0.8x, P/S of 1.0x. 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 High uncertainty rating to Crescent Energy Co. Key risk factors include elevated market sensitivity (beta of 1.76), below-average price stability (38th percentile), the combination of leverage (72% D/E) and thin margins (4.2% net) amplifies downside risk. The wide range of potential outcomes widens our fair value estimate and increases the possibility of permanent capital impairment. Investors considering this name should size positions accordingly and demand a meaningful margin of safety before initiating.

Specific risk factors that inform our assessment include: elevated market sensitivity (beta of 1.76); below-average price stability (38th percentile); the combination of leverage (72% D/E) and thin margins (4.2% 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 38th percentile and quality factor at the 46th percentile provide a quantitative summary of the overall risk landscape.

Key risk mitigants include: healthy gross margins of 89% provide a buffer against cost pressures; a 5.38% dividend yield anchors total return. These factors partially offset the identified risks and provide downside protection in adverse scenarios. On balance, the risk-reward profile warrants caution and disciplined position management.

We rate Crescent Energy Co's capital allocation as Standard. Management has shown adequate — though not exceptional — stewardship of shareholder capital. Returns on equity stand at 3.4%, and the balance sheet is managed within acceptable parameters (D/E: 72%). Exemplary allocators typically sustain ROE above 20% and D/E below 50%; Crescent Energy Co falls short on at least one dimension.

There is room for improvement in optimizing the capital structure or enhancing shareholder returns. The 5.38% dividend yield provides some income return, but the overall capital allocation framework would benefit from either higher reinvestment returns, improved balance sheet efficiency, or increased shareholder distributions. We will monitor for signs of strategic improvement that could warrant an upgrade.

In summary, Crescent Energy Co receives a Reduce rating with a composite score of 41.6/100 (rank #3338 of 7,333). Our quantitative framework assigns a No Moat (36/100, trend: stable), High uncertainty, and Standard capital allocation. The average factor score across quality, value, momentum, stability, and investment is 36/100.

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