PROP

We rate Prairie Operating Co. (PROP) as Avoid with a composite score of 36.2/100 at a current price of $1.75. The stock falls in the bottom quintile of our universe across key quantitative factors, and the multi-factor weakness suggests a high probability of continued underperformance.

The rating is primarily driven by strength in quality (52th percentile) and value (52th percentile), which together account for the majority of the composite score. Offsetting weakness in momentum (6th percentile) and investment (19th percentile) tempers our overall conviction. We assign a No Moat rating (27/100), High uncertainty, and Poor capital allocation.

Key items to watch: momentum to confirm whether the current price trend has legs; balance sheet deleveraging progress. 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.

Prairie Operating 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 36.2/100 places it at rank #3992 in our full 7,333-stock universe. At $100M in market capitalization, Prairie Operating Co. is a small-cap player in the Mining space, which limits certain scale advantages but may allow for more agile strategic execution.

Momentum indicators (6th percentile) suggest caution regarding the near-term price trend. Revenue growth data is unavailable, limiting our ability to confirm whether momentum is fundamentally supported.

The margin cascade tells an important story: gross margins of 77% (+33.8pp vs sector) narrow to operating margins of 25% (+12.9pp vs sector) and net margins of 11.6%, yielding a gross-to-net conversion rate of 15%. This conversion rate is typical for the sector, suggesting a standard cost structure without notable efficiency advantages or disadvantages.

At a current price of $1.75, Prairie Operating Co. is trading near fair value based on current fundamentals. Our value factor score of 52/100 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 3.3x (a 76% discount to the sector median of 13.7x), EV/EBITDA of 2.0x (discounted to peers), P/B of 1.1x, P/S of 0.7x. The below-sector P/E suggests possible undervaluation or the market pricing in near-term headwinds.

We assign a High uncertainty rating to Prairie Operating Co.. Key risk factors include significant leverage (667% debt-to-equity), below-average price stability (28th percentile). 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: significant leverage (667% debt-to-equity); below-average price stability (28th percentile). 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 28th percentile and quality factor at the 52th percentile provide a quantitative summary of the overall risk landscape.

Key risk mitigants include: healthy gross margins of 77% 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 warrants caution and disciplined position management.

We rate Prairie Operating Co.'s capital allocation as Poor. Key concerns include elevated leverage (667% D/E). Exemplary capital allocators generate ROE above 20% and maintain conservative leverage — Prairie Operating Co. 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, Prairie Operating Co. receives a Avoid rating with a composite score of 36.2/100 (rank #3992 of 7,333). Our quantitative framework assigns a No Moat (27/100, trend: stable), High uncertainty, and Poor capital allocation. The average factor score across quality, value, momentum, stability, and investment is 31/100.

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