Range Resources' 2026 FCF Projection Revised Down Amid Gas Price Weakness, Reinforcing Overvaluation Concerns

What happened

A Seeking Alpha article projects Range Resources to generate nearly $500 million in free cash flow for 2026, but this estimate has been negatively revised due to falling natural gas prices and weaker NGL realizations. The downward adjustment reduces the estimated share value from $41 to $39.50, reflecting persistent commodity price pressures that challenge near-term earnings. This aligns with the DeepValue master report's judgment of a 'POTENTIAL SELL,' which highlights RRC's equity as fully to over-valued with a conservative DCF implying ~50% downside to around $18 per share. Recent financials, including volatile free cash flow and a negative $69.3 million in Q3 2025, underscore the cyclical nature and earnings sensitivity inherent in RRC's single-basin, gas-levered model. Overall, the updated projections reinforce existing concerns about valuation headwinds and limited margin of safety in a volatile energy market.

Implication

The downward revision in 2026 FCF projections directly pressures near-term share price targets and confirms the DeepValue report's overvaluation concerns, suggesting little room for upside at current multiples. Long-term, RRC's earnings remain highly sensitive to Henry Hub prices, which are forecasted to rise but face volatility and regulatory overhangs, compounding investment uncertainty. Compared to peers, RRC's concentrated Appalachian focus and lack of structural moat limit resilience, despite low operating costs and long-life reserves. Management's capital return programs, including dividends and buybacks, may be constrained if FCF fails to meet projections, jeopardizing shareholder returns. Therefore, investors should avoid new positions and consider trimming existing holdings until a significant price correction or more stable gas price environment emerges.

Thesis delta

The new FCF projections do not shift the core investment thesis; they reinforce existing concerns about RRC's overvaluation and commodity price exposure. The 'POTENTIAL SELL' recommendation remains valid, as the revised estimates highlight ongoing risks without improving the margin of safety. However, the specific 2026 FCF figure provides an updated data point for monitoring, but does not alter the fundamental cyclical and valuation challenges.