Is Kosmos Energy Ltd. overvalued or undervalued?

As of 6 May 2025, the valuation grade for Kosmos Energy Ltd. has moved from expensive to risky, indicating a deterioration in its valuation outlook. The company appears to be overvalued based on its current metrics, particularly with a P/E ratio of 435, which is significantly higher than peers like Permian Resources Corp. at 9.23 and Matador Resources Co. at 6.13. Additionally, the EV to EBITDA ratio of 5.15 is not competitive when compared to Chord Energy Corp. at 3.72, suggesting that Kosmos is not efficiently generating earnings relative to its enterprise value.
With a Price to Book Value of 0.90 and a ROCE of 6.44%, the company's financial performance does not justify its high valuation. Furthermore, its stock has underperformed significantly against the S&P 500, with a year-to-date return of -48.83% compared to the index's 12.22%. This stark contrast reinforces the view that Kosmos Energy Ltd. is overvalued in the current market environment.