Since April 2021, the S&P 500 has delivered a total return of 64.7%. But one standout stock has more than doubled the market - over the past five years, Matador Resources has surged 160% to $59.83 per share. Its momentum hasn’t stopped as it’s also gained 37.6% in the last six months thanks to its solid quarterly results, beating the S&P by 35%.

Is now still a good time to buy MTDR? Or are investors being too optimistic? Find out in our full research report, it’s free.

Why Are We Positive On MTDR?

Operating primarily in the Delaware Basin where multiple oil-bearing layers lie stacked thousands of feet deep, Matador Resources (NYSE: MTDR) explores for, drills, and produces oil and natural gas from underground rock formations in New Mexico and Texas.

1. Skyrocketing Revenue Shows Strong Momentum

Cyclical industries such as Energy can make mediocre companies look great for a time, but a long-term view reveals which businesses can actually withstand and adapt to changing conditions. Luckily, Matador Resources’s sales grew at an incredible 33.8% compounded annual growth rate over the last five years. Its growth beat the average energy upstream and integrated energy company and shows its offerings resonate with customers.

2. Elite Gross Margin Powers Best-In-Class Business Model

While energy gross margins can be distorted by commodity prices, hedging, and short-term cost swings, sustained margins across a full cycle reflect a producer’s underlying asset quality, infrastructure position, and cost structure.

Matador Resources, which averaged 82.5% gross margin over the last five years, exhibits enviable unit economics in the sector. It means the company will remain profitable at lower commodity prices than peers with inferior gross margins and serves as an advantaged starting point for ultimate operating profits and free cash flow generation.

3. Excellent Free Cash Flow Margin Boosts Reinvestment Potential

Free cash flow isn't a prominently featured metric in company financials and earnings releases, but we think it's telling because it accounts for all operating and capital expenses, making it tough to manipulate. Cash is king.

Matador Resources has shown terrific cash profitability, driven by its lucrative business model that enables it to reinvest, return capital to investors, and stay ahead of the competition. The company’s free cash flow margin was among the best in the energy upstream and integrated energy sector, averaging 23.8% over the last five years.

Final Judgment

These are just a few reasons why Matador Resources is a cream-of-the-crop energy upstream and integrated energy company, and with its shares outperforming the market lately, the stock trades at 8.2× forward P/E (or $59.83 per share). Is now a good time to buy? See for yourself in our comprehensive research report, it’s free.

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