Is TXO Partners LP overvalued or undervalued?

As of 4 March 2025, the valuation grade for TXO Partners LP has moved from risky to very attractive, indicating a significant improvement in its perceived value. The company appears to be undervalued based on its current metrics. Notably, the P/E ratio stands at an extraordinarily high 629, while the EV to EBITDA ratio is at 21.64, and the Price to Book Value is 1.40. These ratios suggest that while the market may be pricing the company highly relative to earnings, it may not be reflective of its intrinsic value.
In comparison to peers, TXO Partners LP's P/E ratio is significantly higher than that of its peer, which has a P/E of approximately 654.66 and an EV/EBITDA of 22.38. This disparity raises questions about the sustainability of TXO's valuation. Furthermore, the company's recent stock performance has lagged behind the S&P 500 over the past year, with a return of -27.45% compared to the index's 10.26%. Overall, despite the high P/E ratio, the valuation shift suggests that TXO Partners LP may present a buying opportunity for investors looking for undervalued assets in the market.