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, particularly when considering its P/E ratio of 629, which is exceptionally high compared to its peer, which has a P/E of 90.1301. Additionally, TXO's EV to EBITDA stands at 21.64, while its EV to Capital Employed is 1.32, suggesting that the company is not effectively utilizing its capital relative to its earnings.
In comparison to its peers, TXO Partners LP's valuation metrics indicate a stark contrast, especially when looking at the industry average P/E. The company's return performance has also lagged behind the S&P 500, with a year-to-date return of -16.63% compared to the index's 12.22%, and a one-year return of -22.39% versus 17.14% for the S&P 500. This underperformance reinforces the notion that TXO may be undervalued in the current market context.