Are Energy Stocks Ready for a Comeback?

Warren Buffett's recent purchase of Dominion Energy's (NYSE: D) natural gas assets surely managed to stir up some investor interest in the lackluster energy stocks. As always, the legendary investor managed to acquire Dominion assets at an attractive price, thanks to the challenging energy market conditions. But is the deal an indication of attractive valuations of energy stocks in general? And more importantly, is the longer-term outlook for oil and gas indeed positive?

Dominion Energy sold its gas assets at an earnings before interest, taxation, depreciation, and amortization (EBITDA) multiple of around 10 times. That's derived from the company's expected 2020 EBITDA of around $1 billion from the assets and the deal amount of roughly $10 billion. Dominion Energy stated on its recent conference call that it viewed this as an attractive multiple, considering that other publicly traded companies involved in natural gas transmission are currently trading at slightly lower valuations. However, the multiple is, in fact, attractive for Berkshire Hathaway (NYSE: BRK.A) (NYSE: BRK.B). That's because crushed energy stock prices have resulted in cheaper valuations of most of the oil and gas stocks.