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Permian Resources Corp is assigned a 3-star quantitative star rating, indicating our belief that this share class is a balanced choice, but prudent investors should consider looking elsewhere. The stock currently trades at a 7% discount to our quantitative fair value estimate of $24.89 per share; however, some caution is warranted due to this estimate's medium uncertainty rating. We require the price/fair value ratio to move a certain amount before the star rating can change. This stability-enhancing buffer is in effect for this stock.

The company's profitability increases our estimated valuation. Highly profitable companies are often more resilient in recessions and are likely to generate stronger future cash flows for shareholders. For example, the firm's EBIT margin of 49.2% ranks in the top 10% compared with peers globally. This company's ability to turn revenue into cash flow is bolstered by its solid EBIT margin, which is wider than peers. We believe this is a sign that shares could be undervalued.

The company's valuation metrics are an additional encouraging factor. A company's valuation metrics provide insights into the market's expectations for its future growth and profitability. The firm's book value yield of 64.8%, a core component of valuation, sits in the top 45% compared with peers globally. The market price is low relative to the book (accounting) value of the company's equity, which further promotes our favorable price/fair value ratio.

In addition to the aforementioned drivers, our model considers momentum as part of its comprehensive analysis. This share class has outperformed the broader universe over the past year. While we believe the stock is undervalued, this outperformance had a negative impact on our valuation estimate.

With its quantitative economic moat rating of none, we do not expect this company to materially outearn its cost of capital in the long run. Additionally, the firm's moderate financial health score suggests it is acceptably positioned against adverse economic circumstances.