Crescent Energy (NYSE: CRGY) is a Houston-based US oil & gas exploration & production company with a geographically diversified asset base spanning the Eagle Ford, Rockies, Permian, Barnett, and Mid-Continent basins. Crescent's defining feature is its acquisition-driven growth model: backed by affiliates of KKR, the company systematically acquires producing assets from higher-cost operators, then drives down operating costs and optimizes development. Founded in 2020; IPO December 2021.
The investment narrative rests on three pillars: (1) a free-cash-flow inflection — FY2025 was the first year of strongly positive FCF ($729M, a ~17% FCF yield) after years of acquisition-funded outspend; (2) a statistically cheap valuation — the stock trades at ~0.84x book value, ~6x EV/EBITDA, and ~5.7x forward earnings; and (3) continued accretive consolidation in a fragmenting US shale market where Crescent is a disciplined buyer.
Reports financials in USD. FY2025 revenue $3.58B; EBITDA $1.67B; FCF $729M. In December 2025 Crescent simplified its Up-C structure (former Class B / minority units converted to Class A common), which collapsed the minority interest and lifted the public share count to ~330M. Q1 2026 (reported May 4) beat: adjusted EPS $0.53 vs $0.39 consensus.
Investment Thesis
CRGY is a deep-value, KKR-sponsored E&P that just inflected to meaningful free cash flow and trades below tangible book. At $13.20 it offers a ~17% trailing FCF yield and a ~3.6% dividend, with the optionality of further accretive M&A in a consolidating basin.
Bull drivers: the FY2025 FCF inflection ($729M) is the structural turn in the story — outspend years are behind it. Cheap on every cash-based multiple (EV/EBITDA ~6x, P/FCF ~6x, P/B 0.84x). Disciplined, repeatable acquisition playbook with KKR backing. Q1 2026 beat and a fresh 52-week high signal improving sentiment. Recent Street price target as high as $20 (+51%).
Key risks: the balance sheet carries the cost of the growth model — net debt rose to $5.7B and net debt/EBITDA sits at ~3.4x, elevated for the sector and a real constraint if commodity prices fall. CRGY is fully exposed to oil, gas, and NGL price swings; GAAP earnings are noisy (FY2024 booked a net loss on non-cash impairments and hedge marks). The trailing-12-month average analyst target ($13.25) sits essentially at the current price — much of the near-term re-rating may already be done, and the upside case leans on commodity strength and continued accretive deals.
| Metric | FY2021 | FY2022 | FY2023 | FY2024 | FY2025 |
|---|---|---|---|---|---|
| Revenue | $1.48B | $3.06B | $2.38B | $2.93B | $3.58B |
| Revenue Growth | — | +107.0% | -22.1% | +23.0% | +22.1% |
| EBITDA | -$0.07B | $1.15B | $1.17B | $1.00B | $1.67B |
| EBITDA Margin | -4.7% | 37.5% | 49.0% | 34.0% | 46.6% |
| Net Income | -$19M | $97M | $69M | -$115M | $133M |
| EPS (Diluted) | -$0.46 | $2.20 | $0.45 | -$0.88 | $0.54 |
| Diluted Shares (M) | 169.5 | 169.0 | 151.2 | 201.2 | 245.1 |
| Metric | FY2021 | FY2022 | FY2023 | FY2024 | FY2025 |
|---|---|---|---|---|---|
| Cash & Equivalents | $0.13B | $0.00B | $0.00B | $0.13B | $0.01B |
| Total Assets | $5.16B | $6.02B | $6.80B | $9.16B | $12.44B |
| PP&E (Net) | $4.56B | $5.44B | $6.12B | $8.15B | $10.28B |
| Total Debt | $1.09B | $1.32B | $1.76B | $3.13B | $5.71B |
| Net Debt | $0.96B | $1.32B | $1.76B | $3.00B | $5.70B |
| Stockholders' Equity | $0.68B | $0.85B | $1.70B | $3.13B | $5.16B |
| Minority Interest | $2.34B | $2.45B | $1.93B | $1.24B | $0.01B |
| Current Ratio | 0.78x | 0.58x | 0.82x | 0.95x | 1.48x |
| Net Debt/EBITDA | n/m | 1.15x | 1.51x | 3.01x | 3.42x |
| Metric | FY2021 | FY2022 | FY2023 | FY2024 | FY2025 |
|---|---|---|---|---|---|
| Operating Cash Flow | $0.23B | $1.01B | $0.94B | $1.22B | $1.68B |
| OCF Margin | 15.8% | 33.1% | 39.3% | 41.7% | 46.9% |
| Capital Expenditures | -$0.27B | -$1.22B | -$1.43B | -$1.24B | -$0.95B |
| CapEx % of Rev | 18.3% | 39.9% | 60.0% | 42.5% | 26.6% |
| Free Cash Flow | -$0.04B | -$0.21B | -$0.49B | -$0.02B | +$0.73B |
| FCF Margin | -2.5% | -6.8% | -20.8% | -0.7% | 20.4% |
| Dividends Paid | -$0.04B | -$0.03B | -$0.03B | -$0.07B | -$0.12B |
| Stock-Based Comp | $0.04B | $0.04B | $0.08B | $0.19B | $0.25B |
| Multiple | FY2021 | FY2022 | FY2023 | FY2024 | FY2025 |
|---|---|---|---|---|---|
| EV/EBITDA | n/m | 2.9x | 3.2x | 6.0x | 6.0x |
| EV/Sales | 2.1x | 1.1x | 1.6x | 2.0x | 2.8x |
| EV/OCF | 13.3x | 3.3x | 4.0x | 4.9x | 6.0x |
| P/B Ratio | 3.15x | 2.39x | 1.17x | 0.94x | 0.84x |
| P/FCF Ratio | n/m | n/m | n/m | n/m | 6.0x |
| Dividend Yield | 1.6% | 1.4% | 1.7% | 2.2% | 3.6% |
| FCF Yield | neg | neg | neg | neg | 16.7% |
| Metric | FY2021 | FY2022 | FY2023 | FY2024 | FY2025 |
|---|---|---|---|---|---|
| Return on Equity | -2.8% | 11.4% | 4.0% | -3.7% | 2.6% |
| Return on Assets | -0.4% | 1.6% | 1.0% | -1.3% | 1.1% |
| Return on Invested Capital | 10.5% | 23.0% | 5.0% | 2.1% | 3.5% |
| EBITDA Margin | -4.7% | 37.5% | 49.0% | 34.0% | 46.6% |
| OCF Margin | 15.8% | 33.1% | 39.3% | 41.7% | 46.9% |
| Interest Coverage (EBIT) | 9.5x | 13.4x | 2.2x | 1.0x | 1.6x |
| Metric | FY2025A | FY2026E | FY2027E | FY2028E | FY2029E |
|---|---|---|---|---|---|
| Revenue (Avg) | $3.58B | $4.90B | $4.65B | $4.55B | $4.21B |
| Rev Growth | +22.1% | +37.0% | -5.2% | -2.2% | -7.3% |
| EBITDA (Avg) | $1.67B | $1.59B | $1.51B | $1.48B | $1.37B |
| EPS (Avg) | $0.54 | $2.33 | $2.32 | $2.17 | $1.98 |
| EPS Growth | n/m | +331% | -0.4% | -6.5% | -8.8% |
| # Analysts (Rev) | — | 5 | 5 | 3 | 2 |
| Fwd P/E | 24.4x | 5.7x | 5.7x | 6.1x | 6.7x |
| Name | Title | Type | Shares | Price | Date |
|---|---|---|---|---|---|
| Liberty Mutual Foundation | 10% owner | Sale | 32,600,000 | $12.33 | May 07 |
| Rowland Marcus C | director | Sale | 40,000 | $13.25 | May 06 |
| Goff John C | director | Award | 31,012 | — | Apr 01 |
| Simon Karen Jo | director | Award | 17,411 | — | Apr 01 |
| McCain Ellis L | director | Award | 17,411 | — | Apr 01 |
| Albrecht William E | director | Award | 17,411 | — | Apr 01 |
| Farley Claire S | director | Award | 17,411 | — | Apr 01 |
| Gwin Robert G | director | Award | 17,411 | — | Apr 01 |
| Hollingsworth Jarvis V. | director | Award | 17,411 | — | Apr 01 |
| Brown Bevin | director | Award | 17,411 | — | Apr 01 |
| Shi Bo | officer | Tax W/H | 3,426 | $12.73 | Apr 01 |
The free-cash-flow inflection is real. FY2025 produced +$729M of FCF (20.4% margin) after four years of negative FCF. With capex now ~27% of revenue and OCF at a record $1.68B, Crescent has crossed into a self-funding phase that underwrites the dividend and debt reduction.
Statistically cheap on every cash measure. ~6x EV/EBITDA, ~6x P/FCF, 0.84x tangible book, and a ~17% trailing FCF yield. The market is pricing CRGY as a distressed acquirer; the cash flows say otherwise.
Repeatable, KKR-backed M&A engine. Crescent buys producing assets from higher-cost operators and drives down costs — a counter-cyclical consolidation playbook in a fragmenting US shale market with a deep-pocketed sponsor.
Momentum and a beat. Q1 2026 adjusted EPS of $0.53 beat the $0.39 consensus by 36%; the stock printed a fresh 52-week high in May. A recent Street price target of $20 implies ~+51% upside, and Zacks flags ~+26% to consensus.
Diversification cushions single-basin risk. Exposure spans Eagle Ford, Rockies, Permian, Barnett, and Mid-Con — reducing dependence on any one play's geology, takeaway, or differential.
Leverage is the Achilles' heel. Net debt rose to $5.7B and net debt/EBITDA sits at ~3.4x — roughly double the comfort zone for an E&P. In a commodity downturn, that leverage turns the FCF story negative quickly and could pressure the dividend and refinancing terms.
Pure commodity-price exposure. Revenue and cash flow track oil, gas, and NGL prices directly. A sustained move to $55–60 WTI compresses EBITDA and erases much of the FCF cushion that the entire thesis depends on.
The easy re-rate may be done. The trailing-12-month average analyst price target ($13.25) is essentially the current price. The stock has already run ~40% over the past year; further upside leans on commodity strength plus continued accretive deals — neither guaranteed.
Acquisition risk cuts both ways. A roll-up depends on buying well and integrating cleanly. Overpaying, debt-funded deals, or integration missteps would dilute the per-share economics that make the stock cheap today.
Noisy GAAP and structural overhang. Earnings are obscured by impairments and hedge marks; the Up-C unwind lifted the share count to ~330M and sponsor-affiliated holders continue to distribute stock, a recurring supply overhang.
CRGY's revenue and FCF are fully exposed to oil, gas, and NGL prices. A drop to $55–60 WTI (or weak Henry Hub / NGL realizations) would compress FY26 EBITDA below $1.4B and threaten the FCF that funds the dividend and deleveraging. Hedges smooth but do not eliminate the exposure.
Net debt/EBITDA of ~3.4x is high for the sector. Refinancing $5.7B of debt at higher rates, or a leverage-driven covenant squeeze in a downturn, is the most acute balance-sheet risk. EBIT interest coverage is thin at ~1.6x.
The growth model depends on buying assets accretively and integrating them while lowering costs. Overpaying, debt-funded deals, or integration shortfalls would erode the per-share value proposition and add leverage at the wrong time in the cycle.
GAAP results swing on mark-to-market hedge gains/losses and non-cash impairments (FY2024 booked a net loss on these). This obscures underlying economics and can spook headline-driven investors even when cash flow is healthy.
E&P assets deplete; sustaining production requires continuous capex and successful reserve replacement. If maintenance capex rises or drilling results disappoint, the newly positive FCF compresses fast — capex discipline is the load-bearing assumption.
The December 2025 Up-C simplification lifted the public float to ~330M shares, and KKR/sponsor-affiliated holders continue to distribute stock (e.g., the May 2026 32.6M-share foundation transfer). Ongoing supply can cap re-rating even as fundamentals improve.
Constructive commodity backdrop ($75+ WTI), a fresh accretive acquisition, and continued FCF-funded deleveraging compress the discount. Stock re-rates toward ~7x EV/EBITDA on FY26 — matching the recent Street high target of $20.
Range-bound oil ($65–75), FCF sustains the dividend and modest debt paydown, leverage edges toward 3x. Holds ~6x EV/EBITDA with a small re-rate for the FCF inflection — modestly above the trailing $13.25 average target.
Commodity downturn to $55–60 WTI compresses EBITDA below $1.4B; FCF thins, deleveraging stalls at ~3.4x and the dividend comes under scrutiny. Stock derates and retests toward the 52-week low of $7.68.
This report was generated using FMP financial data as of May 23, 2026. This is for informational purposes only and does not constitute investment advice. Past performance is not indicative of future results.