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Viper Energy, Inc. (VNOM)

Undervalued
EnergyOil & Gas MidstreamUnited States

Fundamental

50

Price

$39.89

Market Cap

$14.96B

Part 1 · What the company is worth

Overview

Viper Energy owns mineral and royalty interests under oil and gas acreage in the Permian Basin, mostly operated by its controlling shareholder Diamondback Energy. It does not drill or operate wells itself: it collects a royalty percentage of the oil, gas and natural gas liquids produced by whoever operates the land, without paying any of the drilling or operating costs.

How it makes money

Revenue is royalty income: a contractual share of the value of oil, gas and natural gas liquids extracted from the acreage underlying its mineral interests, paid by the well operator regardless of who drills. Because it funds none of the drilling, completion or lease operating costs, almost all of that royalty income flows through to cash flow, and the main variables are commodity prices and how fast operators — chiefly Diamondback — drill the acreage.

Competitive moat

No identified moat · None

Oil, gas and natural gas liquids are commodities sold at prevailing market prices Viper does not control. Its advantage is a low-cost structure — no drilling or operating capital at risk — rather than pricing power or a durable barrier competitors cannot replicate by buying comparable acreage.

What drives demand

Cyclical

Royalty income moves with oil and gas prices and with the pace at which operators drill the underlying acreage — both of which swing with the broader commodity cycle and operators' own capital budgets. A slowdown in drilling by Diamondback or other operators reduces future production without Viper being able to do anything about it.

Key risks

  • Dependence on operators it does not control — Viper earns nothing from acreage that is not drilled, and it has no say over an operator's pace of drilling, well design or capital budget — including Diamondback's own.
  • Conflicts of interest with the controlling shareholder — Diamondback is simultaneously Viper's largest operator, its controlling shareholder and the counterparty in acreage drop-down acquisitions, creating potential conflicts in how those transactions and operating decisions are priced and timed.
  • Commodity price volatility — Royalty income moves directly with oil, natural gas and natural gas liquids prices, which are set by global supply and demand outside the company's control and can fall sharply and quickly.
  • Geographic concentration in the Permian Basin — Substantially all of Viper's acreage sits in a single basin, so a regional problem — pipeline bottlenecks, water disposal limits, or a local regulatory change — affects nearly the entire portfolio at once.

Customer concentration

Diamondback Energy, Viper's controlling shareholder, operates roughly 35% of Viper's net royalty acreage, making it by far the largest single operator whose drilling pace determines revenue; the company does not disclose the exact percentage of royalty income tied to Diamondback.

The case for

Buyers argue that a royalty-only model with no drilling or operating costs converts an unusually high share of revenue into free cash flow, that being tied to Diamondback gives Viper visibility into a disciplined operator's development plans, and that further mineral acquisitions can keep growing the acreage base without diluting the cost structure.

The case against

Sellers fear that dependence on Diamondback's drilling pace and on transactions with the same controlling shareholder concentrates risk in one counterparty, that a sustained drop in oil and gas prices hits royalty income directly with no operating cost buffer to absorb it, and that geographic concentration in a single basin leaves no diversification if a regional bottleneck appears.

Written by the editors, published on August 18, 2026

Direct competitors

Who this company fights with for the same customers

No editorial profile for this company yet

No competitor list for this company yet.

Balance Sheet & Liquidity

Revenue

$1.97B

Trailing 12 months (through 6/30/2026)

Net Income

$59M

Trailing 12 months (through 6/30/2026)

Free Cash Flow

-

Total Equity

$4.45B

Total Liabilities

$2.31B

Current Ratio

6.37

Interest Coverage

-

Debt/EBITDA

0.89

Earnings Per Share

Revenue & Net Income

Free Cash Flow

Income Breakdown

Historical statement

Margins over time

Debt over time

How heavy the debt is

Growth grid

Growth — Revenue

Fair Value Estimation

CyclicalUndervalued

Fair Value

$55.15

Current Price

$39.89

Margin of Safety

+27.7%

Fair Value Range

$52.39 - $57.91

Spread across the valuation methods used, not a statistically calibrated confidence interval.

Estimation Methods

Analyst price target:$55.15
Discounted cash flow (DCF):Not applicable to this type of company
Earnings multiple (P/E):Not enough data to compute it
Graham growth formula:Not applicable to this type of company
Earnings power value (EPV):$11.06
Justified P/B:Not applicable to this type of company
Dividend discount (Gordon):Not applicable to this type of company
P/FFO, funds from operations:Not applicable to this type of company
Mid-cycle earnings:Not enough data to compute it
Revenue multiple:Not applicable to this type of company
Analyst Consensus:Strong Buy (25B / 1H / 0S)
Last Earnings Surprise:-8.06%

Valuation Metrics

P/E Ratio

257.95

ROE

-1.5%

P/B Ratio

1.54

P/FCF

-

Gross Margin

-

ROIC

1.7%

Profitability Radar

Value Creation (Economic Moat)

ROIC

1.7%

WACC

7.2%

ROIC − WACC

-5.5 pp

ROIC is below the cost of capital — the company is destroying value for every dollar invested.

Fundamental Analysis Criteria

Passed (11)

  • Price CAGR 9.85%
  • P/B Ratio 1.54
  • Debt/Equity ratio
  • Operating Margin 12.7%
  • Current Ratio
  • Debt/EBITDA
  • Low reliance on intangibles
  • Revenue Growth 5Y 41.0%
  • Analyst Consensus 96% Buy
  • Earnings Surprise avg 3.1%
  • Earnings Quality (OCF/NI) 25.34

Failed (7)

  • EPS shows upward trend
  • ROIC 1.7%
  • Return on Tangible Assets
  • DCF valuation (Unknown)
  • ROE 1.2%
  • Share Dilution 50.7%
  • Piotroski F-Score 3/9

Unavailable (9)

  • Gross Margin NaN%
  • P/FCF NaN
  • Dividend Payout NaN%
  • Positive Free Cash Flow
  • CapEx intensity
  • Interest Coverage
  • Price below Graham Number
  • PEG Ratio (need PE > 0 and growth > 0)
  • Net Margin Trend (invalid data)

Piotroski F-Score

3/9

Serious financial concerns

score
criteria

Earnings Quality

25.34

High quality: earnings backed by cash

Share Dilution

50.7%

Issuing new shares, diluting ownership

Institutional Holdings

Governance

Executive Team

NameTitleAge
Mr. Matthew Kaes Van't HofCEO & Director38
Mr. Austen GilfillianPresident32
Ms. Teresa L. Dick CPAExecutive VP, CFO & Assistant Secretary55
Mr. Albert BarkmannExecutive VP & Chief Engineer44
Mr. Chip SealeDirector of Investor Relations-
Mr. Will KruegerVP, General Counsel and Secretary-

Audit Risk

3

Board Risk

3

Compensation Risk

9

Shareholder Rights Risk

3

Part 2 · The price and when to enter

This part won't tell you whether the company is worth owning: it helps you choose when to buy it, once the fundamentals have convinced you. Inside: technical analysis, potential, historical drawdowns, gamma exposure.

Documents

  • Annual Report (10-K)

    A yearly overview of the business, its financial results, and the risks it faces.

    Filed on 2026-02-25

    View document
  • Quarterly Report (10-Q)

    A snapshot of financial performance for the most recent three-month period.

    Filed on 2026-08-05

    View document
  • Current Report (8-K)

    An announcement of a major event, such as a leadership change or big news.

    Filed on 2026-09-16

    View document

via SEC EDGAR

Income History

via SEC EDGAR

Latest News

Recent headlines for VNOM, sourced from Markets Gazette.

No recent news for VNOM.