Epsilon Energy (EPSN) AI Stock Analysis

• Market Cap: $125.73M
• Dividend Yield: 4.52%
• Average Volume (3M): 117.88K
• Price to Earnings (P/E): 24.4
• Beta (1Y): 0.36
• Revenue Growth: 45.90%
• EPS Growth: -2.29%
• Country: US
• Employees: 10
• Sector: Energy
• Sector Strength: 55
• Industry: Oil & Gas Exploration & Production
• EPS (TTM): 0.21
• Shares Outstanding: 22,058,575
• 10 Day Avg. Volume: 93,233
• 30 Day Avg. Volume: 117,879
• PEG Ratio: N/A
• Price to Book (P/B): N/A
• Price to Sales (P/S): N/A
• P/FCF Ratio: N/A
• Enterprise Value/Market Cap: 1.23
• Enterprise Value/Revenue: 3.51
• Enterprise Value/Gross Profit: 7.61
• Enterprise Value/Ebitda: 6.92
• 1Y Price Target: $6.00
• Price Target Upside: 8.50% Upside
• Rating Consensus: Hold
• Number of Analyst Covering: 1

• Rating: 64 Neutral
• Price Target: $6.00 ▲(8.50% Upside)

Epsilon Energy's overall stock score is primarily driven by its strong financial performance and strategic acquisition, which enhance growth potential. However, technical indicators suggest bearish momentum, and valuation metrics indicate potential overvaluation. The earnings call provides a balanced outlook, with significant growth opportunities tempered by immediate financial challenges.

Epsilon Energy Business Overview & Revenue Model

Company Description

Epsilon Energy Ltd., a natural gas and oil company, engages in the acquisition, development, gathering, and production of oil and gas reserves in the United States. It operates through Upstream and Gathering System segments. The Company has natural gas production in the Marcellus in Pennsylvania; and oil, natural gas liquids (NGL), and natural gas production in the Anadarko Basin in Oklahoma. As of December 31, 2021, it had total estimated net proved reserves of 110,969 million cubic feet of natural gas reserves, 819,726 barrels of NGL, and 305,052 barrels of oil and other liquids. Epsilon Energy Ltd. was incorporated in 2005 and is based in Houston, Texas.

How the Company Makes Money

Epsilon Energy generates revenue primarily through the sale of oil and natural gas. The company operates in key natural gas plays, particularly in the Marcellus Shale, where it drills and produces hydrocarbons that are then sold to various customers, including utilities and industrial users. Revenue is derived from the production of natural gas, natural gas liquids (NGLs), and crude oil. The company may also benefit from price fluctuations in the energy market, and its revenue can be influenced by contracts with midstream services for transportation and processing of its production. Additionally, strategic partnerships and joint ventures with other companies in the energy sector can provide further opportunities for revenue generation and cost-sharing.

Epsilon Energy Financial Statement Overview

Summary

Epsilon Energy shows commendable revenue growth and effective cost management, with a strong balance sheet characterized by low leverage. However, declining net profit margins and returns on equity, along with negative free cash flow, indicate challenges in profitability and capital efficiency.

Income Statement

Epsilon Energy has demonstrated strong revenue growth over the years, with a notable rise from $24.4M in 2020 to $39.7M in TTM (Trailing-Twelve-Months). The gross profit margin is healthy at 45.1%, indicating effective cost management. However, net profit margins have seen fluctuations, currently at 11.2% in TTM, down from previous years. EBIT and EBITDA margins are solid, reflecting operational efficiency, but the decline in net income from 2022 indicates potential challenges in profitability.

Balance Sheet

The company's balance sheet is robust, characterized by a very low debt-to-equity ratio of 0.004, implying minimal leverage and financial risk. The equity ratio is strong at 79.5%, suggesting a stable capital structure. However, the return on equity has seen a decline, with a ROE of 4.45% in TTM, which could indicate inefficiencies in generating profits from equity.

Cash Flow

Cash flow analysis reveals a mixed picture. While operating cash flow remains strong at $21.7M in TTM, the free cash flow is negative at -$2.06M, primarily due to high capital expenditures. The operating cash flow to net income ratio is favorable, suggesting good cash generation relative to net profits, but the negative free cash flow indicates a need for better capital expenditure management.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	44.02M	31.52M	30.73M	69.96M	42.40M	24.43M
Gross Profit	20.29M	11.81M	14.18M	54.11M	27.15M	6.39M
EBITDA	22.29M	13.79M	17.91M	54.00M	22.80M	11.12M
Net Income	5.17M	1.93M	6.95M	35.35M	11.63M	875.17K
Balance Sheet
Total Assets	123.61M	120.45M	124.04M	123.86M	99.46M	86.68M
Cash, Cash Equivalents and Short-Term Investments	9.91M	6.52M	32.18M	45.24M	26.50M	13.27M
Total Debt	417.31K	476.91K	563.38K	35.30K	0.00	0.00
Total Liabilities	23.42M	23.73M	23.43M	19.62M	20.20M	17.66M
Stockholders Equity	100.19M	96.73M	100.61M	104.25M	79.26M	69.02M
Cash Flow
Free Cash Flow	6.42M	-19.73M	-457.78K	29.94M	15.12M	8.29M
Operating Cash Flow	24.75M	16.83M	18.19M	38.01M	20.01M	14.82M
Investing Cash Flow	-18.04M	-16.66M	-38.38M	-7.87M	-4.44M	-6.52M
Financing Cash Flow	-6.17M	-7.32M	-11.73M	-11.35M	-2.34M	-9.08M

Epsilon Energy Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 5.53
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Negative
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For EPSN, the sentiment is Negative. The current price of 5.53 is below the 20-day moving average (MA) of 5.87, below the 50-day MA of 6.37, and below the 200-day MA of 6.51, indicating a bearish trend. The MACD of -0.17 indicates Negative momentum. The RSI at 37.25 is Neutral, neither overbought nor oversold. The STOCH value of 30.51 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for EPSN.

Epsilon Energy Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
REI	68 Neutral	$206.54M	2.87	8.08%	―	-13.66%	-4.85%
Sector *	65 Neutral	$15.01B	7.51	4.09%	5.36%	4.10%	-61.80%
PHX	65 Neutral		―		―	11.84%	61.88%
EPSN	64 Neutral	$125.73M	24.41	5.18%	4.52%	45.90%	-2.29%
EPM	57 Neutral	$177.37M	89.30	-1.24%	9.28%	3.79%	-131.01%
WTI	50 Neutral	$261.08M	―	203.83%	2.29%	-11.53%	-342.58%
GTE	47 Neutral	$139.05M	21.67	-15.60%	―	-8.33%	-213.31%

Epsilon Energy Corporate Events

Epsilon Energy Announces Acquisition of Peak Entities

On August 11, 2025, Epsilon Energy Ltd. announced its entry into definitive agreements to acquire Peak Exploration & Production LLC and Peak BLM Lease LLC, entities majority owned by Yorktown Energy Partners LLC. The acquisition involves the issuance of 6 million Epsilon common shares and the assumption of an estimated $49 million in debt, with additional contingent consideration possible. The transactions, expected to close in Q4 2025 pending shareholder approval, aim to expand Epsilon’s asset base in the Powder River Basin, enhancing its operational control and growth opportunities. This strategic move is anticipated to be accretive to Epsilon’s forecasted financial metrics and reserves, while maintaining a strong balance sheet and dividend payouts.

Epsilon Energy Holds 2025 Annual General Meeting

Epsilon Energy held its 2025 Annual General Meeting on May 21, 2025, with 67% of its common shares represented. During the meeting, shareholders voted to set the number of directors at six, elected six directors for a term expiring in 2026, re-appointed BDO USA, P.C. as auditors for the fiscal year ending December 31, 2025, and approved the compensation for the company’s named executive officers for 2024.