CRC Valuation Check and Entry Setup for Pragmatic Buyers

California Resources Corporation CRC is benefiting from a more supportive policy environment in California and added scale from a pending merger, but quarterly results still move with commodity prices. Strong liquidity and hedging help support capital returns, even as softer production and higher costs pressure near-term performance.

Where the Stock Sits Today

Shares trade at $44.64 against a $50 price target. On trailing numbers, EV/EBITDA is 4.07X versus 10.1X for the sub-industry and 5.46X for the sector, with price-to-sales at 1.2X. Over the past year, the stock has been down 12.8%, and over the last six months, it has declined by 3.1%. The valuation gap versus peers and the market is notable given CRC’s asset base and policy tailwinds.

What Expectations Embed

The Zacks Consensus Estimate calls for earnings per share of $4.14 in 2025 and $2.27 in 2026, with sales of $3.36 billion and $3.27 billion, respectively. The most recent quarter printed adjusted EPS of $1.46, a beat, while revenue of $855 million fell year over year on a sharp reversal in derivative outcomes. The production mix remained oil-weighted at about 78%, and management reiterated a disciplined spending plan into 2026.

California Resources Corporation Price and Consensus

California Resources Corporation price-consensus-chart | California Resources Corporation Quote

Cash Returns and Balance Sheet

CRC’s dividend yield is around 3.6%, supported by a 5% raise in the latest quarter. The repurchase program retains more than $200 million of capacity through mid-2026. Total liquidity exceeds $1.1 billion, and a robust hedge book and modest leverage underpin ongoing cash returns alongside measured capital expenditures. Together, these factors allow the company to stay patient for more attractive entry points while keeping its capital return plans firmly on track.

Catalysts That Could Unlock Multiple Expansion

California’s policy climate has turned more constructive, including strengthened permitting, CO2 pipeline authorization, and an extension of Cap-and-Invest to 2045. That should shorten cycle times and improve development visibility as CRC adds rigs in early 2026. The pending Berry combination is designed to deliver $80–$90 million of annual synergies within 12 months of close, with nearly half realized in the first six months, while adding scale and low-decline barrels. Early carbon capture monetization is targeted for 2026, supported by seven Class VI permits under review and a growing partnerships pipeline. Taken together, these developments create clearer, more achievable routes to stronger earnings and valuation gains, as long as CRC executes as planned.

Risks to Manage

Commodity and derivative volatility can drive sizable swings in reported revenues and earnings, as demonstrated by the third-quarter decline largely tied to hedging outcomes. Operating and tax costs remain elevated following portfolio expansion, and regulatory and litigation timelines still govern permitting and carbon storage approvals. Production is under near-term pressure, with third-quarter volumes down from a year ago, which could limit upside until growth picks up again. Investors should factor these risks and timing uncertainties into any entry decisions.

Positioning Lens for the Next 1-3 Months

The short-term signal is cautious. CRC carries a Zacks Rank #4 (Sell), reflecting softer estimate momentum into the one- to three-month window. Investors focused on timing may want to watch for progress on key permits and the closing of the Berry merger in early 2026 before increasing their exposure. For investors comparing options within exploration and production, Matador Resources MTDR and Murphy Oil MUR both hold Zacks Rank #3 (Hold) and offer dividend yields of about 3.6% and 4.2%, respectively, which may suit buyers seeking steadier near-term setups while keeping exposure to the group.

You can see the complete list of today’s Zacks #1 Rank stocks here.

From a tactical perspective, CRC looks attractively valued based on its recent earnings multiples and a clear set of upcoming catalysts. A gradual buying approach around regulatory and merger developments, with added flexibility to take advantage of pullbacks driven by short-term commodity swings, fits the current risk-reward profile.

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

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