Is Kosmos Energy Ltd. overvalued or undervalued?

As of 6 May 2025, the valuation grade for Kosmos Energy Ltd. has moved from fair to risky, indicating a significant deterioration in its financial standing. The company is currently deemed overvalued based on its high P/E ratio of 435, which starkly contrasts with peers like National Fuel Gas Co. at 11.37 and California Resources Corp. at 14.51. Additionally, the EV to EBITDA ratio stands at 5.15, while the industry average appears to be more favorable, suggesting that Kosmos is not performing competitively.
The company's financial metrics further highlight its challenges, with a ROCE of 6.44% and an ROE of only 0.21%, both of which are considerably lower than those of its peers. This underperformance is compounded by its recent stock performance, which has seen a dramatic decline of 62.12% over the past year, compared to a 10.26% return for the S&P 500. Overall, these factors contribute to the conclusion that Kosmos Energy Ltd. is overvalued in the current market environment.