Permian Resources Stock: Not a Buy Yet, But Still Worth Holding

Over the past three months, Permian Resources Corporation PR has outperformed both the U.S. Oil & Gas Exploration & Production sub-industry (ZS136M) and the broader Zacks Oil and Energy Sector. PR experienced strong growth of 7.6%, reflecting a steady upward trend. In contrast, its sub-industry saw a slight decline of 1.6%, while the Zacks Oils and Energy Sector posted a more modest increase of 3.3%. Thus, Permian Resources had the most substantial positive movement, significantly surpassing the other two indices.

3-Month Stock Performance Snapshot

PR Stock’s Earnings Estimates

In the past 60 days, the Zacks Consensus Estimate for PR's earnings per share has risen 5.43% for 2025, but has decreased 1.65% for 2026.

Midland, TX-based oil and gas E&P company has been on fire recently, outperforming both its sector and sub-industry with a solid 7.6% growth over the past three months. But with this strong performance comes big questions: Is now the right time to buy, or is there more risk than reward hidden beneath the surface? Let’s break down what is driving PR’s success and where the potential pitfalls lie.

Signals of Rising Potential for PR’s share

Consistent Operational Outperformance and Raised Guidance: PR delivered strong third-quarter 2025 production, with oil output up 6% sequentially to 186.9 MBbls/d, leading to a full-year production guidance increase. This marks the 12th consecutive quarter of strong operational performance, demonstrating the company's ability to execute consistently and outperform its own plans, which builds investor confidence in management's forecasting and delivery capabilities.

Strong and Improving Balance Sheet With Path to Investment Grade: The company has significantly strengthened its financial position, reducing total debt by 11% in the third quarter to $3.6 billion and achieving a low leverage ratio of 0.8x. PR received an investment-grade rating from Fitch and a positive outlook from Moody's, which is expected to lower its cost of capital and provide financial resilience through commodity cycles.

Proven, Disciplined and Active Acquisition Strategy: Permian Resources has a successful decade-long track record of value-driven mergers and acquisitions (M&A). In third-quarter 2025, the company executed 250 transactions, adding high-quality acreage in its core area at attractive prices. Management states its acquisition pipeline is the strongest ever, providing a clear pathway to low-cost inventory growth and reinforcing the market consolidation strategy.

High-Quality Asset Base in the Core Delaware Basin: PR owns approximately 475,000 net acres concentrated in the core of the Delaware Basin, which is considered among the highest-quality oil resources globally. This premium asset base, combined with its low-cost operations, forms the foundation for durable, high-margin production and provides a long runway of economic drilling inventory.

Major Uncertainties Influencing Projections

Exposure to Inherent Volatility of Oil and Gas Prices: As clearly outlined in its risk factors, Permian Resources’ financial health is heavily dependent on commodity prices. A prolonged period of low oil, natural gas liquids or natural gas prices — potentially driven by OPEC+ actions, global demand shifts, or recessions — could severely impact revenues, cash flow and the company's ability to execute its shareholder return strategy.

Execution and Integration Risks From Aggressive Acquisition Strategy: While the company has a strong M&A track record, its aggressive pace of deal-making (more than 250 transactions in the third quarter) carries inherent risks. Future acquisitions may fail to integrate smoothly, anticipated synergies may not materialize or the company may overpay for assets, especially in a competitive landscape, potentially diluting shareholder value.

Concentration Risk in the Permian Delaware Basin: All assets of Permian Resources are located in the Permian Basin, primarily the Delaware sub-basin. This geographic concentration exposes the company to region-specific risks such as pipeline takeaway constraints, changes in local regulations (particularly in New Mexico), adverse weather events and basin-wide cost inflation, which could disproportionately affect its operations compared with diversified peers.

Potential for Rising Costs and Service Sector Inflation: Although the company is currently benefiting from lower service costs, any significant rebound in commodity prices could lead to a rapid reacceleration of drilling and completion costs across the basin. If Permian Resources' efficiency gains cannot fully offset such inflation, its peer-leading capital efficiency and margins could come under pressure.

Verdict for PR Stock   

PR has demonstrated consistent operational outperformance, with strong production growth and raised guidance, underscoring its ability to meet and exceed expectations. The company also boasts a solid balance sheet, having reduced debt and earned an investment-grade rating, which enhances its financial stability. Furthermore, the disciplined acquisition strategy has allowed Permian Resources to expand the high-quality asset base in the core of the Delaware Basin, positioning it for long-term success.

However, the company faces challenges, including the exposure to volatile oil prices, execution risks related to the aggressive M&A strategy and geographic concentration in the Permian Basin, which exposes it to region-specific risks. Additionally, rising costs and potential inflation in the service sector could impact its capital efficiency. Given this mix of strengths and potential challenges, investors should wait for a more opportune entry point instead of adding this company to their portfolios.

PR's Zacks Rank & Key Picks

Currently, PR has a Zacks Rank #3 (Hold).

Investors interested in the energy sector might look at some better-ranked stocks like USA Compression Partners USAC, which sports a Zacks Rank #1 (Strong Buy), and Oceaneering International OII and Canadian Natural Resources Limited CNQ, which hold a Zacks Rank #2 (Buy) each at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research