Is Black Stone Minerals (BSM) Offering Value After Strong Multi‑Year Price Gains

• If you are looking at Black Stone Minerals and wondering whether the current price offers solid value, this article will walk you through what the numbers are really saying.
• The stock last closed at US$15.25, with returns of 0.7% over 7 days, 8.2% over 30 days, 12.9% year to date, 12.0% over 1 year, 34.1% over 3 years and a very large gain over 5 years of 169.4%.
• Recent price moves sit against a backdrop of ongoing investor interest in energy royalty and mineral rights businesses. In these businesses, revenue is often tied to commodity activity rather than operating wells directly. For Black Stone Minerals, this context has kept attention on how resilient its royalty model might be across different parts of the commodity cycle.
• On our valuation framework, Black Stone Minerals scores 5 out of 6 on undervaluation checks. Next we will look at how different methods such as discounted cash flows and market multiples line up, and then finish with a more complete way to think about value that goes beyond any single model.

Find out why Black Stone Minerals's 12.0% return over the last year is lagging behind its peers.

Approach 1: Black Stone Minerals Discounted Cash Flow (DCF) Analysis

A Discounted Cash Flow model estimates what a company could be worth by projecting its future cash flows and then discounting those back to today, using a required rate of return. It is essentially asking what all those future dollars are worth in present terms.

For Black Stone Minerals, the model uses a 2 Stage Free Cash Flow to Equity approach. The last twelve months Free Cash Flow is reported at about $278.2 million. The model then applies forecasts and extrapolated estimates, including a projection of $198.8 million in Free Cash Flow by 2035, with intermediate annual figures between those two points provided in the cash flow schedule.

When all projected cash flows are discounted back to today, the resulting intrinsic value is US$20.39 per share. Compared to the recent share price of US$15.25, this indicates a 25.2% discount, suggesting the stock is trading below this DCF estimate of value.

Result: UNDERVALUED

Our Discounted Cash Flow (DCF) analysis suggests Black Stone Minerals is undervalued by 25.2%. Track this in your watchlist or portfolio, or discover 56 more high quality undervalued stocks.

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Black Stone Minerals.

Approach 2: Black Stone Minerals Price vs Earnings

For a profitable business like Black Stone Minerals, the P/E ratio is a useful shorthand for how much you are paying for each dollar of earnings. Investors usually expect a higher P/E when they see stronger growth potential or lower perceived risk, and a lower P/E when growth looks slower or risks appear higher.

Black Stone Minerals currently trades on a P/E of 13.21x. That sits slightly below the Oil and Gas industry average of about 14.47x, and well below the broader peer group average of 33.89x. To sharpen this further, Simply Wall St calculates a proprietary “Fair Ratio” for the stock of 17.69x, which is the P/E level suggested by its earnings profile, industry, profit margins, market cap and flagged risks.

This Fair Ratio can be more informative than a simple comparison with peers or the wider industry because it adjusts for company specific traits rather than assuming all Oil and Gas names deserve the same multiple. When compared with the 17.69x Fair Ratio, the current 13.21x P/E indicates that Black Stone Minerals is trading below what this framework implies.

Result: UNDERVALUED

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Upgrade Your Decision Making: Choose your Black Stone Minerals Narrative

Earlier we mentioned that there is an even better way to understand valuation. On Simply Wall St's Community page you can use Narratives, where you and other investors connect a clear story about Black Stone Minerals to specific forecasts for revenue, earnings and margins. You can then link that to a fair value, compare it with the current price to decide whether to buy or sell, and have that view update automatically as new news or earnings arrive. This is why one investor might build a Narrative that supports a fair value near the US$13.00 analyst consensus, while another, with a more cautious or more optimistic take on drilling, production and long term risks, might land on a meaningfully lower or higher value for the same units.

Do you think there's more to the story for Black Stone Minerals? Head over to our Community to see what others are saying!

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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