CRC Valuation Check and Entry Setup for Pragmatic Buyers

Core Insights - California Resources Corporation (CRC) is experiencing benefits from a supportive policy environment and a pending merger, although quarterly results are still influenced by commodity prices [1] Financial Performance - Shares are currently trading at $44.64 with a price target of $50, showing a trailing EV/EBITDA of 4.07X compared to 10.1X for the sub-industry and 5.46X for the sector, with a price-to-sales ratio of 1.2X [2] - The most recent quarter reported an adjusted EPS of $1.46, exceeding expectations, while revenue was $855 million, reflecting a year-over-year decline due to derivative outcomes [4] Cash Returns and Balance Sheet - CRC has a dividend yield of approximately 3.6%, supported by a 5% increase in the latest quarter, and retains over $200 million in its repurchase program through mid-2026 [5] - Total liquidity exceeds $1.1 billion, with a robust hedge book and modest leverage supporting ongoing cash returns and capital expenditures [5] Catalysts for Growth - California's improved policy climate includes strengthened permitting and an extension of Cap-and-Invest to 2045, which is expected to enhance development visibility [6] - The pending merger with Berry is projected to generate $80–$90 million in annual synergies within 12 months of closing, with nearly half expected to be realized in the first six months [6][7] - Early carbon capture monetization is targeted for 2026, supported by seven Class VI permits under review [6] Valuation and Market Position - CRC's stock trades at a significant valuation discount compared to peers, despite strong assets and favorable policy support [7] - The company is positioned to benefit from upcoming catalysts, which could lead to stronger earnings and valuation gains if executed as planned [8]