CTRA

We rate Coterra Energy Inc. (CTRA) as a Hold with a composite score of 51.5/100 at a current price of $30.49. The stock presents a mixed quantitative picture — neither compelling enough to warrant new accumulation nor weak enough to justify selling for existing holders. Our factors are split, and the overall profile suggests patience is warranted.

The rating is primarily driven by strength in stability (83th percentile) and quality (51th percentile), which together account for the majority of the composite score. Offsetting weakness in investment (22th percentile) and momentum (35th percentile) tempers our overall conviction. We assign a Narrow Moat rating (49/100), Low uncertainty, and Exemplary 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.

Coterra Energy Inc. 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 51.5/100 places it at rank #1783 in our full 7,333-stock universe. With a $18.0B market capitalization, Coterra Energy Inc. operates at meaningful scale within the Mining sector, providing competitive advantages in distribution, procurement, and customer reach.

Revenue is growing at 43%, though momentum at the 35th 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 87% (+44.2pp vs sector) narrow to operating margins of 31% (+18.5pp vs sector) and net margins of 22.3%, yielding a gross-to-net conversion rate of 26%. This conversion rate is typical for the sector, suggesting a standard cost structure without notable efficiency advantages or disadvantages.

At a current price of $30.49, Coterra Energy Inc. is trading near fair value based on current fundamentals. Our value factor score of 50/100 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 14.8x (roughly in line with the sector median of 13.7x), EV/EBITDA of 12.5x (at a premium), P/B of 1.6x, P/S of 3.4x. 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 Low uncertainty rating to Coterra Energy Inc.. The company exhibits strong financial stability with a beta of 0.65, conservative leverage (27% D/E), and a stability factor in the 83th percentile. The predictable nature of the business model and solid financial position reduce the range of potential outcomes, giving us confidence in our fair value estimate.

Specific risk factors that inform our assessment include: low beta of 0.65 — while defensive, this may indicate limited upside participation in bull markets. 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 83th percentile and quality factor at the 51th percentile provide a quantitative summary of the overall risk landscape.

Key risk mitigants include: healthy gross margins of 87% provide a buffer against cost pressures; conservative leverage (27% D/E) limits balance sheet risk; above-average stability (83th percentile) suggests predictable business dynamics. 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 Coterra Energy Inc.'s capital allocation as Exemplary. Management demonstrates a strong track record of balancing reinvestment with shareholder returns, evidenced by disciplined leverage (27% D/E), a 3.68% dividend yield, best-in-class net margins of 22.3%. Exemplary allocators typically generate returns on equity above 20% while maintaining debt-to-equity below 50% — Coterra Energy Inc. approaches this high bar.

The balance sheet remains conservatively managed, providing financial flexibility for opportunistic investments while maintaining a margin of safety for shareholders. The company returns capital via a 3.68% dividend yield, and the combination of 6.7% return on assets and controlled leverage suggests management is deploying capital at rates well above the cost of capital — the hallmark of exemplary stewardship.

In summary, Coterra Energy Inc. receives a Hold rating with a composite score of 51.5/100 (rank #1783 of 7,333). Our quantitative framework assigns a Narrow Moat (49/100, trend: stable), Low uncertainty, and Exemplary capital allocation. The average factor score across quality, value, momentum, stability, and investment is 48/100.

Our analysis supports a neutral stance on Coterra Energy Inc.. While the quantitative profile is not weak enough to warrant selling, it lacks the multi-factor strength required for a buy recommendation. Existing holders should maintain positions and monitor for catalysts — either fundamental improvement or valuation compression — that would shift the risk-reward balance.