Lubin Investment · Blog

Is Range Resources (RRC) stock undervalued in 2026?

2026-07-14 ·

RRC: see the full analysis on Lubin Investment

Range Resources scores 9 out of 10 in my quality screen, and the stock trades at only about 6 times the cash it generates each year, one of the lowest valuations across my entire screener. The market has little interest in US natural gas right now. But the rise of liquefied natural gas exports could change that. Here is why I am watching this name closely, without rushing in.

The natural gas everyone is ignoring

US natural gas has been going through a rough patch for two years. Domestic prices remain historically low, squeezed between abundant production out of the Marcellus basin in Pennsylvania and domestic demand that simply cannot keep up. As a result, most publicly traded gas producers post choppy results, and their stocks are shunned by a market that would much rather chase artificial intelligence and technology names.

Range Resources is part of that unloved group. And yet my quality screen gives it 9 out of 10, with a stock trading at only about 6 times the cash it generates every year, one of the lowest valuations across my entire universe of 5,000 stocks. Before calling it a bargain, it is worth understanding why the market shuns it this much, and whether that discount is justified.

A 9 out of 10 score, with one honest weak spot

My screen runs every company through ten concrete financial criteria: profitability, growth, balance sheet discipline, and the ability to turn accounting profit into real cash. Range Resources passes nine of them. Its free cash flow margin, the money that is genuinely left over once every bill is paid (drilling, wages, taxes), reaches 42%. In other words, out of every $100 of revenue, $42 ends up as cash the company can actually use, a level few industrial companies reach. Its return on invested capital (what the company earns on every dollar it plows back into drilling) tops 21%, a strong figure for a sector known for being capital hungry.

The one criterion that fails: sales growth, down 2.7% year over year. This is not an execution problem. Range is not selling less gas, it is selling it cheaper: the US natural gas price (Henry Hub, the market benchmark) fell over the period, and revenue mechanically follows. That is the nature of a commodity business: the selling price does not depend on how well the company is run, but on a global market nobody controls. That is exactly why I weigh the balance sheet and financial discipline as heavily as raw growth for a name like this.

The real driver: the rise of LNG exports

What sets Range Resources apart from a simple bet on gas prices is its position in the Marcellus basin, widely seen as the cheapest, lowest-emission gas basin in the country. Historically, that cheap gas suffered from one simple problem: it was stuck inside the United States, with no easy way to reach the higher prices paid on world markets.

That bottleneck is starting to break. US liquefied natural gas exports (LNG, gas cooled to minus 162 degrees Celsius so it can travel by ship) are now approaching 20 billion cubic feet per day, up 20% year over year, helped in particular by the ramp up of the Golden Pass terminal in Louisiana. Every new export terminal that comes online connects Marcellus's cheap gas a little more to the higher prices paid abroad. For a low cost producer like Range, that is a structural tailwind, not a bet on a single quarter.

A balance sheet that inspires confidence

The criterion that reassures me most about Range Resources is its financial discipline. Net debt sits at just 0.56 times annual free cash flow, comfortably under the level that would worry me. The company is targeting over $800 million in free cash flow in 2026, after taxes. Its share count has stayed essentially flat in recent years, a sign management is not diluting shareholders to fund growth, unlike many peers in the sector who borrow heavily the moment prices recover.

This is something I check systematically for commodity companies: a low price cycle is a discipline test. Companies that keep a clean balance sheet through the trough are the ones that come out of the next cycle unscathed, while overleveraged competitors are forced to sell assets or issue new shares at the worst possible time.

The price: one of the lowest valuations in my screen

To measure what the market is willing to pay for Range Resources, I look at the P/FCF (price to free cash flow): the share price divided by the free cash flow generated each year. A P/FCF of 6 means you are paying six years of that cash to own the company today. The lower the number, the cheaper it is. For comparison, an average quality company typically trades between 15 and 20 times its cash. Range Resources, at around 6 times, ranks among the lowest valuations across my 5,000-stock screener, in any sector.

Combining current profitability with conservative assumptions about future gas prices, my model puts Range Resources's reasonable buy price around $53.56. The stock trades around $39 as of mid-July 2026, a margin of safety of over a quarter below that entry point. A good deal on paper, but one still subject to a variable neither Range nor I control: where natural gas prices go from here.

The real risk: gas prices, not the company

The number one risk here is not operational, it is macro. If winter 2026-2027 turns out mild and heating demand stays weak, US gas prices could stay depressed longer than expected, and Range's free cash flow with them. The LNG export thesis is real, but it plays out over several years, not one quarter: new export terminals take time to ramp, and geopolitical tensions or construction delays can push the timeline back.

Range reports earnings on July 20, 2026. That will be a chance to check whether cost discipline is holding up and whether full year free cash flow guidance stays on track. It is not the data point that drives my thesis, but a useful checkpoint to confirm, or not, that the scenario described here still holds.

How I am calling it

Range Resources checks nearly every box in my quality screen, with a solid balance sheet, real profitability, and one of the lowest valuations I track. This is not a bet on an unlikely turnaround, it is a well run company in a temporarily unloved sector, with a structural catalyst (LNG exports) that does not depend on a one off stroke of luck. I never recommend a specific stock, but this is exactly the kind of name my method is built to surface: quality first, price second, and I let the market come to me rather than chase it.

FAQ

What is P/FCF (price to free cash flow)?

The share price divided by free cash flow, the cash a company genuinely has left after paying every bill and every investment. A P/FCF of 6 means you are paying six years of that cash to own the company today. The lower it is, the cheaper the stock.

Why are Range Resources's sales falling if the company is high quality?

Range sells a commodity, natural gas, whose market price has fallen. The company is producing as much, if not more, but revenue mechanically follows the price of gas, a variable outside its control. That is different from a demand or management problem.

What does LNG export growth change for Range Resources?

US natural gas has historically sold for less than gas overseas, for lack of an easy way to export it. New liquefied natural gas (LNG) terminals, like Golden Pass, are gradually connecting the Marcellus basin's cheap gas to higher world prices, which can support domestic prices for years to come.

Should you buy Range Resources stock now?

My model puts the reasonable buy price around $53.56 against a share price around $39 in mid-July 2026, leaving a margin of safety. But the sector still depends on natural gas prices, a volatile variable. This is not personalized investment advice, do your own research.

What is the main risk on this name?

A mild winter and weak heating demand could keep gas prices depressed longer than expected. The LNG export thesis plays out over years, not a single quarter.

RRC: see the full analysis on Lubin Investment

About the author

Written by Lubin Danilo, founder of Lubin Investment. A self-taught individual investor, I find fundamental analysis fascinating, and it has delivered excellent results. For three years now, my performance has beaten the S&P 500. But analyzing every stock took too much time: sites with incomplete data, calculation methods and criteria never aligned with mine. And spotting the best stocks was just as time-consuming, even with my own well-defined checklist. So I put my software development background to work to build this software, base my investment strategy on its results, and share it with people who share the same passion as me. It judges a company's quality and its price separately, using criteria drawn from the financial literature (Warren Buffett, Michael Mauboussin, Aswath Damodaran).