Headwater Exploration (HWX) AI Stock Analysis

• Market Cap: $1.54B
• Dividend Yield: 6.46%
• Average Volume (3M): 730.33K
• Price to Earnings (P/E): 8.2
• Beta (1Y): 0.80
• Revenue Growth: 20.20%
• EPS Growth: 19.79%
• Country: CA
• Employees: 38
• Sector: Energy
• Sector Strength: 87
• Industry: Oil & Gas Exploration & Production
• EPS (TTM): 0.79
• Shares Outstanding: 237,774,460
• 10 Day Avg. Volume: 673,118
• 30 Day Avg. Volume: 730,325
• PEG Ratio: 0.41
• Price to Book (P/B): N/A
• Price to Sales (P/S): 2.45
• Price to Cash Flow (P/CF): 5.00
• P/FCF Ratio: 18.70
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: C$8.85
• Price Target Upside: 36.38% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 5

Headwater Exploration's strong financial performance, characterized by robust revenue growth, solid balance sheet, and effective cash management, is a major strength. Valuation metrics such as a low P/E ratio and high dividend yield further enhance its attractiveness. However, technical analysis shows neutral market momentum, which tempers the overall score.

Positive Factors

Exploration and Production

Headwater highlighted record production, one of the best reserve reports from a profitability standpoint, and encouraging results at Marten Hills West and Nipisi.

Financial Performance

For every dollar spent, there was $1.87 in value created.

Future Prospects

With emerging new exploration plays outside the Clearwater, there’s lots to like about Headwater's future prospects.

Negative Factors

Headwater Exploration Business Overview & Revenue Model

Company Description

Headwater Exploration Inc. (HWX) is a Canadian-based oil and gas exploration and production company. The company operates in the energy sector, focusing on the acquisition, exploration, and development of petroleum and natural gas properties. Headwater Exploration primarily concentrates its efforts in the Marten Hills area of Alberta, Canada, where it develops heavy oil resources. The company aims to enhance shareholder value through efficient resource extraction and sustainable growth strategies.

How the Company Makes Money

Headwater Exploration makes money through the production and sale of crude oil and natural gas. The company's primary revenue stream is the extraction and sale of these hydrocarbons from its reserves in the Marten Hills region. As oil and gas are commodities, Headwater's earnings are significantly influenced by market prices for these resources, which can fluctuate based on global supply and demand dynamics. Additionally, the company may enter into strategic partnerships or joint ventures to optimize resource development and leverage additional expertise and capital. Cost management, operational efficiency, and technological advancements in extraction processes are also crucial factors contributing to Headwater's financial performance.

Headwater Exploration Financial Statement Overview

Summary

Headwater Exploration exhibits strong financial performance, characterized by robust revenue and profit growth, a solid balance sheet, and healthy cash flow generation. The company’s minimal debt and high profitability margins position it well for future growth, although attention to EBIT generation could enhance overall performance metrics.

Income Statement

Headwater Exploration has demonstrated strong revenue growth, with a significant increase from the previous year. The gross profit margin stands at 53.6% for 2024, indicating efficient cost management. However, the EBIT margin is not calculable due to zero EBIT in 2024, which slightly dampens the overall profitability analysis. The net profit margin of 30.3% is impressive, reflecting strong bottom-line growth.

Balance Sheet

The company's balance sheet is robust, with a low debt-to-equity ratio of 0.0039, indicating minimal leverage. The equity ratio is strong at 73.4%, showcasing a solid capital structure. The return on equity is healthy at 26.9%, demonstrating effective use of shareholder funds. Overall, the balance sheet reflects stability and low financial risk.

Cash Flow

Cash flow analysis reveals a positive trend, with a notable increase in free cash flow by 48.4% from the previous year. The operating cash flow to net income ratio is 1.68, indicating strong cash generation relative to net income. The free cash flow to net income ratio of 0.50 suggests effective cash management despite high capital expenditures.

Breakdown
Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement		Total Revenue
619.80M	425.55M	458.38M	190.94M	9.50M
	Gross Profit
332.06M	193.33M	266.00M	108.10M	49.00K
	EBIT
0.00	179.60M	210.88M	69.94M	-8.20M
	EBITDA
372.81M	324.89M	287.96M	95.66M	5.49M
	Net Income Common Stockholders
188.03M	156.07M	162.11M	45.83M	6.71M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
142.69M	146.05M	175.45M	114.70M	76.77M
	Total Assets
952.64M	836.34M	734.74M	488.81M	300.69M
	Total Debt
2.72M	842.00K	861.00K	1.55M	436.00K
	Net Debt
-139.97M	-145.21M	-174.59M	-113.15M	-76.34M
	Total Liabilities
253.18M	225.84M	191.41M	91.02M	31.66M
	Stockholders Equity
699.46M	610.50M	543.34M	397.79M	269.03M
Cash Flow		Free Cash Flow
93.87M	63.25M	35.00M	-28.73M	-34.83M
	Operating Cash Flow
316.74M	303.32M	283.93M	111.66M	230.00K
	Investing Cash Flow
-226.85M	-243.71M	-232.06M	-109.13M	-34.40M
	Financing Cash Flow
-93.24M	-89.00M	8.88M	35.40M	49.99M

Headwater Exploration Technical Analysis

• Technical Analysis Sentiment: Neutral
• Last Price: 6.49
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Negative
• RSI: Neutral
• STOCH: Negative

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TSE:HWX, the sentiment is Neutral. The current price of 6.49 is above the 20-day moving average (MA) of 6.18, below the 50-day MA of 6.59, and below the 200-day MA of 6.67, indicating a neutral trend. The MACD of -0.03 indicates Negative momentum. The RSI at 54.89 is Neutral, neither overbought nor oversold. The STOCH value of 89.96 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for TSE:HWX.

Headwater Exploration Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
TOU	78 Outperform	C$25.71B	19.49	8.55%	1.92%	-8.29%	-30.52%
WCP	76 Outperform	$5.57B	6.94	14.51%	8.05%	3.34%	-6.99%
HWX	72 Outperform	$1.54B	8.16	28.90%	6.46%	20.20%	19.79%
ARX	71 Outperform	$16.66B	14.99	14.67%	2.58%	-9.83%	-27.76%
BTE	68 Neutral	$2.50B	11.14	5.99%	2.86%	22.71%	―
CVE	67 Neutral	C$37.40B	12.20	10.88%	3.45%	3.97%	-22.22%
Sector *	58 Neutral	$9.28B	5.49	-6.28%	7.46%	-0.20%	-73.68%

Headwater Exploration Corporate Events

Headwater Exploration Reports Strong 2024 Financial Results and Declares Dividend

Headwater Exploration Inc. reported its financial and operational results for the year ending December 31, 2024, showing a significant increase in net sales and adjusted funds flow from operations compared to the previous year. The company also declared a quarterly dividend, reflecting stable financial health and commitment to shareholder returns, despite a decrease in natural gas production.

Headwater Exploration Reports Q4 Production and Expands Land Holdings

Headwater Exploration Inc. reported an average production volume of approximately 21,500 BOE/d for the fourth quarter and announced land expansions in the Clearwater fairway, enhancing its operational footprint. The company has also entered into a significant farmout agreement with the Bigstone Cree Nation to drill wells in the Greater Pelican area, pending regulatory approval, and has acquired additional land through crown sales. This strategic expansion, including a new acquisition in the Greater Peavine area, positions Headwater for further exploration and drilling activities in 2025, with plans to test new prospects and continue its growth trajectory.