Is Sitio Royalties Corp. overvalued or undervalued?

As of 26 February 2025, the valuation grade for Sitio Royalties Corp. has moved from risky to very attractive. The company appears to be undervalued based on key financial metrics. The P/E ratio stands at 29, while the industry average P/E is significantly lower, indicating a potential mispricing. Additionally, the EV to EBITDA ratio is 7.67, which is favorable compared to peers like Blackstone Secured Lending Fund at 6.12 and Kimbell Royalty Partners LP at 8.47. The PEG ratio of 0.06 further suggests that the stock is undervalued relative to its growth prospects.
In terms of returns, Sitio Royalties Corp. has underperformed the S&P 500 over the past year, with a decline of 16.67% compared to the index's gain of 10.26%. However, the company's dividend yield of 3.85% and ROCE of 8.43% provide additional value for investors. Overall, Sitio Royalties Corp. presents an attractive investment opportunity given its current valuation metrics and growth potential.