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Texas Pacific Land (TPL) has drawn fresh attention after unveiling a partnership with Bolt Data & Energy to build large-scale data center campuses on its West Texas land, supported by a US$50 million investment and water supply rights.
See our latest analysis for Texas Pacific Land.
The data center announcement comes after a strong run in the share price, with a 27.83% 1 month share price return and 38.07% year to date. Over a 1 year period, the total shareholder return is a loss of 8.23%, while the 5 year total shareholder return is 254.80%. This points to long term gains alongside some recent volatility as the market reassesses growth prospects and risks.
If this move into AI related infrastructure has caught your attention, it could be a good moment to see what else is out there through our 34 AI infrastructure stocks.
With Texas Pacific Land now trading at US$411.40 and sitting well above the average analyst price target of US$280.83, the key question is whether the AI data center story leaves upside on the table or if future growth is already priced in.
Compared with the most followed fair value estimate of $280.83, Texas Pacific Land’s last close of $411.40 reflects a sizeable premium that the narrative tries to explain using long term growth, margins and a specific future valuation multiple.
TPL’s industry-leading EBITDA margins (86.4%), net cash balance ($460 million with zero debt), and highly scalable, capex-light business model create substantial financial flexibility, enabling opportunistic shareholder returns (buybacks) or inorganic growth through asset acquisitions, which can support future earnings per share.
Curious what kind of revenue climb and margin profile would need to hold up for that fair value to work, and which future earnings multiple the narrative leans on to get there? The full story walks through those assumptions step by step and shows how they tie back to that discount rate and long range cash flow view.
Result: Fair Value of $280.83 (OVERVALUED)
Have a read of the narrative in full and understand what’s behind the forecasts.
However, there are still meaningful swing factors, including stronger than expected royalty and water services growth or higher than modeled future P/E multiples, that could challenge this view of overvaluation.
Find out about the key risks to this Texas Pacific Land narrative.
If you see this differently or simply prefer to crunch the numbers yourself, you can shape your own view in just a few minutes by starting with Do it your way.
A great starting point for your Texas Pacific Land research is our analysis highlighting 2 key rewards and 1 important warning sign that could impact your investment decision.
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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.
Companies discussed in this article include TPL.
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