Evolution Petroleum (EPM) AI Stock Analysis

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Evolution Petroleum

(NYSE MKT:EPM)

56Neutral

Evolution Petroleum's overall score reflects a mixed financial performance, with strengths in its balance sheet and production growth, but weaknesses in profitability and cash flow. Technical analysis shows moderate bullish momentum, while valuation suggests overvaluation risks. Positive earnings call sentiment and strategic initiatives are offset by revenue challenges and operational issues.

Evolution Petroleum (EPM) vs. S&P 500 (SPY)

Market Cap

$157.23M

Dividend Yield10.46%

Average Volume (3M)190.36K

Price to Earnings (P/E)94.4

Beta (1Y)0.91

Revenue Growth-10.60%

EPS Growth-90.09%

CountryUS

Employees11

SectorEnergy

Sector Strength59

IndustryOil & Gas Exploration & Production

Share Statistics

EPS (TTM)0.05

Shares Outstanding34,253,900

10 Day Avg. Volume159,112

30 Day Avg. Volume190,357

Financial Highlights & Ratios

PEG RatioN/A

Price to Book (P/B)N/A

Price to Sales (P/S)1.97

Price to Cash Flow (P/CF)5.50

P/FCF Ratio5.50

Enterprise Value/Market CapN/A

Enterprise Value/RevenueN/A

Enterprise Value/Gross ProfitN/A

Enterprise Value/EbitdaN/A

Forecast

1Y Price Target

$7.38

Price Target Upside60.78% Upside

Rating ConsensusModerate Buy

Number of Analyst Covering2

Evolution Petroleum Business Overview & Revenue Model

Company DescriptionEvolution Petroleum Corporation (EPM) is an independent energy company primarily engaged in the acquisition, development, and production of oil and natural gas reserves in the United States. The company focuses on long-life oil and gas assets, utilizing innovative and efficient methods to enhance production and maximize value. With a commitment to sustainability and operational excellence, Evolution Petroleum leverages its technical expertise to optimize resource extraction and expand its asset portfolio.

How the Company Makes MoneyEvolution Petroleum generates revenue through the production and sale of oil and natural gas from its portfolio of properties. The company's primary revenue streams include the sale of crude oil and natural gas liquids (NGLs) extracted from its operated and non-operated assets. By focusing on fields with proven reserves and employing enhanced recovery techniques, Evolution Petroleum maximizes production efficiency and profitability. Key factors contributing to the company's earnings include favorable market prices for oil and gas, strategic acquisitions of additional reserves, and partnerships with other operators to optimize resource development. Additionally, Evolution Petroleum aims to maintain low operating costs and a strong balance sheet to support sustainable financial performance.

Evolution Petroleum Financial Statement Overview

Summary

Evolution Petroleum faces challenges in profitability and cash flow, despite a stable balance sheet. Income statement scores are concerning due to declining margins, while the balance sheet remains strong with low leverage. Cash flow issues are significant, with negative free cash flow indicating cash management challenges.

Income Statement

Neutral

Evolution Petroleum's income statement reveals fluctuating revenue with a notable decline in the TTM period, which is concerning. The gross profit margin has decreased from 42.5% in 2023 to 20.4% TTM, indicating pressure on profitability. The net profit margin also fell significantly from 27.4% in 2023 to 2.0% TTM, reflecting increased costs or lower revenue. Additionally, EBIT and EBITDA margins have decreased, emphasizing the need for efficiency improvements.

Balance Sheet

Positive

The balance sheet is relatively strong, showcasing a low debt-to-equity ratio of 0.0002 in the TTM period, indicating low leverage. Despite this, the return on equity has dropped from 38.2% in 2023 to 2.3% TTM, suggesting decreased profitability. The equity ratio is healthy at 47.6% TTM, reflecting a solid financial foundation.

Cash Flow

Negative

Cash flow analysis highlights challenges, with a negative free cash flow of -$17.2 million TTM, a deterioration from -$26.9 million in 2023. The operating cash flow to net income ratio is strong at 15.1 TTM, but the free cash flow to net income ratio is negative, signaling cash management issues. The company needs to address these cash flow concerns to improve financial health.

TTM	Jun 2024	Jun 2023	Jun 2022	Jun 2021	Jun 2020
Breakdown
Income Statement		Total Revenue
86.42M	85.88M	128.51M	108.93M	32.70M	29.60M
	Gross Profit
16.91M	19.00M	54.70M	52.22M	11.16M	10.48M
	EBIT
5.74M	7.91M	45.11M	45.38M	4.23M	5.25M
	EBITDA
28.78M	27.02M	59.39M	49.67M	-16.15M	11.01M
	Net Income Common Stockholders
1.76M	4.08M	35.22M	32.63M	-16.44M	5.94M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
5.20M	6.45M	11.03M	8.28M	5.28M	19.66M
	Total Assets
36.23M	162.88M	128.32M	148.05M	76.71M	92.14M
	Total Debt
0.00	39.66M	125.00K	21.25M	4.02M	84.98K
	Net Debt
-3.85M	33.21M	-10.91M	12.97M	-1.26M	-19.58M
	Total Liabilities
4.86M	81.75M	36.22M	72.53M	22.11M	18.01M
	Stockholders Equity
31.37M	81.13M	92.09M	75.51M	54.59M	74.12M
Cash Flow		Free Cash Flow
-17.24M	-26.90M	44.28M	-2.41M	-14.04M	1.33M
	Operating Cash Flow
26.68M	22.73M	51.27M	52.46M	4.73M	12.40M
	Investing Cash Flow
-47.76M	-49.63M	-6.99M	-54.87M	-18.77M	-11.06M
	Financing Cash Flow
24.28M	22.32M	-41.53M	5.42M	-349.43K	-13.22M

Evolution Petroleum Technical Analysis

Technical Analysis Sentiment

Negative

Last Price4.59

Price Trends

50DMA

5.04

Negative

100DMA

5.19

Negative

200DMA

5.09

Negative

Market Momentum

MACD

0.04

Negative

RSI

55.68

Neutral

STOCH

70.95

Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For EPM, the sentiment is Negative. The current price of 4.59 is below the 20-day moving average (MA) of 5.00, below the 50-day MA of 5.04, and below the 200-day MA of 5.09, indicating a bearish trend. The MACD of 0.04 indicates Negative momentum. The RSI at 55.68 is Neutral, neither overbought nor oversold. The STOCH value of 70.95 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for EPM.

Evolution Petroleum Peers Comparison

Overall Rating

UnderperformOutperform

Sector (57)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
DMLP	62 Neutral	$1.33B	13.19	32.48%	11.44%	-1.39%	-23.38%
SJT	61 Neutral	$232.58M	45.08	189.96%	8.49%	-85.94%	-88.55%
Sector *	57 Neutral	$7.70B	4.18	-3.52%	8.32%	0.35%	-64.68%
EPM	56 Neutral	$157.23M	94.44	1.95%	10.46%	-10.60%	-90.09%

* Energy Sector Average

Performance Comparison

EPM

Evolution Petroleum

4.59

-0.96

-17.30%

DMLP

Dorchester Minerals

28.13

-2.97

-9.55%

SJT

San Juan Basin Royalty

4.99

-0.44

-8.10%

Evolution Petroleum Earnings Call Summary

Earnings Call Date: Feb 11, 2025 | % Change Since: -11.22% | Next Earnings Date: May 13, 2025

Earnings Call Sentiment Neutral

The earnings call highlighted notable achievements in production growth, consistent dividend payments, and promising M&A opportunities. However, it also acknowledged challenges such as revenue decline due to lower commodity prices, operational issues in Chaveru, and temporary downtime in Williston.

Highlights

Strong Production Growth

Total production grew 10% year over year to 6,935 BOE per day, demonstrating the strength of Evolution's diversified portfolio.

Consistent Dividend Payments

The company announced its 46th consecutive dividend payment, maintaining a quarterly payout of $0.12 per share.

Promising M&A Opportunities

The company is evaluating multiple acquisition opportunities that could enhance long-term growth and cash flow generation, potentially being materially accretive.

Successful Resolution of Operational Issues

Temporary downtime in Williston and Chaveroo was resolved, with production rates fully restored by January.

Above-Average Performance in SCOOP/STACK

Production from SCOOP/STACK is outperforming type curves, with gas production about 10% higher than expected.

Lowlights

Revenue Decline

Total revenues of $20.3 million were down 4% year over year, primarily due to a 12% decline in realized commodity prices.

Challenges in Chaveru Field

Production at Chaveru was temporarily impacted by gas interference issues in the downhole pumps.

Compressor Failure in Williston Basin

A compressor failure on a third-party operated gathering system caused temporary downtime, affecting natural gas and NGL sales.

Company Guidance

During the Evolution Petroleum fiscal second quarter 2025 earnings call, management provided optimistic guidance for the remainder of the year, despite challenges faced in the first half due to significantly lower realized commodity prices, particularly for natural gas. The company reported a 10% year-over-year increase in total production to 6,935 BOE per day, driven by contributions from diversified, long-life, low-decline assets. Evolution Petroleum highlighted its strategic focus on maintaining strong cash flow and shareholder returns, evidenced by its 46th consecutive quarterly dividend payment of $0.12 per share. The company is actively evaluating multiple acquisition opportunities, aiming to enhance long-term growth and cash flow generation. In fiscal Q2 2025, Evolution Petroleum reported total revenues of $20.3 million, a 4% year-over-year decline due to a 12% decrease in commodity prices, though this was largely offset by increased production volumes. The company remains financially robust with $11.7 million in cash and $39.5 million in credit facility borrowings, ensuring $22.2 million in total liquidity to support ongoing strategic initiatives.

Glossary

OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.

NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.

UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.