Would You Still Hold Texas Pacific Land Stock If It Fell Another 30%?
Texas Pacific Land (TPL) stock is down 67.2% in 5 trading days. The recent slide reflects renewed concerns around declining water sales and recent earnings misses, but sharp drops like this often raise a tougher question: is the weakness temporary, or a sign of deeper cracks in the story?
Before judging its downturn reslience, let’s look at where Texas Pacific Land stands today.
- Size: Texas Pacific Land is a $20 Bil company with $772 Mil in revenue currently trading at $294.53.
- Fundamentals: Last 12 month revenue growth of 12.5% and operating margin of 75.8%.
- Liquidity: Has Debt to Equity ratio of 0.0 and Cash to Assets ratio of 0.35
- Valuation: Texas Pacific Land stock is currently trading at P/E multiple of 42.6 and P/EBIT multiple of 34.7
- Has returned (median) 21.5% within a year following sharp dips since 2010. See TPL Dip Buy Analysis.
These metrics point to a Strong operational performance, alongside Very High valuation – making the stock Relatively Expensive. For details, see Buy or Sell TPL Stock
That brings us to the key consideration for investors worried about this fall: how resilient is TPL stock if markets turn south? This is where our downturn resilience framework comes in. Suppose TPL stock falls another 20-30% to $206 – can investors comfortably hold on? Turns out, the stock has fared worse than the S&P 500 index during various economic downturns, based on (a) how much the stock fell and, (b) how quickly it recovered. Below, we dive deeper into each such downturn.
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2022 Inflation Shock
- TPL stock fell 52.8% from a high of $905.02 on 7 November 2022 to $427.55 on 23 June 2023 vs. a peak-to-trough decline of 25.4% for the S&P 500.
- However, the stock fully recovered to its pre-Crisis peak by 19 September 2024
- Since then, the stock increased to a high of $1,730.00 on 24 November 2024 , and currently trades at $294.53
| TPL | S&P 500 | |
|---|---|---|
| % Change from Pre-Recession Peak | -52.8% | -25.4% |
| Time to Full Recovery | 454 days | 464 days |
2020 Covid Pandemic
- TPL stock fell 62.4% from a high of $273.12 on 8 January 2020 to $102.78 on 23 March 2020 vs. a peak-to-trough decline of 33.9% for the S&P 500.
- However, the stock fully recovered to its pre-Crisis peak by 11 January 2021
| TPL | S&P 500 | |
|---|---|---|
| % Change from Pre-Recession Peak | -62.4% | -33.9% |
| Time to Full Recovery | 294 days | 148 days |
2018 Correction
- TPL stock fell 50.5% from a high of $290.66 on 3 October 2018 to $144.00 on 21 December 2018 vs. a peak-to-trough decline of 19.8% for the S&P 500.
- However, the stock fully recovered to its pre-Crisis peak by 10 April 2019
| TPL | S&P 500 | |
|---|---|---|
| % Change from Pre-Recession Peak | -50.5% | -19.8% |
| Time to Full Recovery | 110 days | 120 days |
2008 Global Financial Crisis
- TPL stock fell 73.2% from a high of $20.50 on 29 June 2007 to $5.50 on 9 March 2009 vs. a peak-to-trough decline of 56.8% for the S&P 500.
- However, the stock fully recovered to its pre-Crisis peak by 21 March 2013
| TPL | S&P 500 | |
|---|---|---|
| % Change from Pre-Recession Peak | -73.2% | -56.8% |
| Time to Full Recovery | 1,473 days | 1,480 days |
Feeling jittery about TPL stock? Consider portfolio approach.
The Best Investors Think In Portfolios
Stocks soar and sink – the key is staying invested. A balanced portfolio keeps you in the market, boosts gains and reduces single stock risk
The Trefis High Quality (HQ) Portfolio, with a collection of 30 stocks, has a track record of comfortably outperforming its benchmark that includes all 3 – the S&P 500, S&P mid-cap, and Russell 2000 indices. Why is that? As a group, HQ Portfolio stocks provided better returns with less risk versus the benchmark index; less of a roller-coaster ride, as evident in HQ Portfolio performance metrics.