Headwater Exploration (HWX) AI Stock Analysis

• Market Cap: $2.16B
• Dividend Yield: 4.73%
• Average Volume (3M): 725.16K
• Price to Earnings (P/E): 12.4
• Beta (1Y): 1.24
• Revenue Growth: 6.44%
• EPS Growth: -6.74%
• Country: CA
• Employees: 38
• Sector: Energy
• Sector Strength: 52
• Industry: Oil & Gas Exploration & Production
• EPS (TTM): 0.15
• Shares Outstanding: 238,762,880
• 10 Day Avg. Volume: 626,367
• 30 Day Avg. Volume: 725,163
• PEG Ratio: 0.39
• Price to Book (P/B): 2.23
• Price to Sales (P/S): 2.52
• P/FCF Ratio: 16.65
• Enterprise Value/Market Cap: 0.78
• Enterprise Value/Revenue: 2.80
• Enterprise Value/Gross Profit: 5.38
• Enterprise Value/Ebitda: 4.71
• 1Y Price Target: $9.93
• Price Target Upside: 9.16% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 4
• EPS Forecast (FY): 0.75
• Revenue Forecast (FY): $592.90M

• Rating: 79 Outperform
• Price Target: C$10.50 ▲(15.38% Upside)

Headwater Exploration's stock score is driven by strong technical indicators and solid financial performance. The company's low leverage and efficient operations are significant strengths, despite challenges in revenue and free cash flow growth. The valuation is reasonable with an attractive dividend yield, supporting a positive outlook.

Positive Factors

Financial Stability

Headwater Exploration's minimal leverage indicates strong financial stability, reducing risk and enhancing its ability to weather economic fluctuations.

Profitability

Consistent profitability with high margins suggests effective cost management and operational efficiency, supporting long-term business sustainability.

Cash Generation

Strong cash generation relative to net income enhances liquidity and supports future investments, ensuring the company's operational flexibility.

Negative Factors

Revenue Decline

A significant decline in revenue growth reflects potential market challenges or operational issues, which could impact long-term growth prospects.

Free Cash Flow

Negative free cash flow growth may limit the company's ability to fund new projects or return capital to shareholders, affecting future growth and liquidity.

Earnings Growth

Negative earnings growth indicates challenges in maintaining profitability, which could affect investor confidence and long-term valuation.

Headwater Exploration Business Overview & Revenue Model

Company Description

Headwater Exploration Inc., a junior resource company, engages in the exploration, development, and production of petroleum and natural gas in the Western Canadian Sedimentary Basin and onshore in New Brunswick. It holds interests in the McCully Field located to the northeast of Sussex, New Brunswick; the Clearwater play located in the Marten Hills, Alberta; and the Frederick Brook shale gas prospect located in New Brunswick. The company was formerly known as Corridor Resources Inc. and changed its name to Headwater Exploration Inc. in March 2020. Headwater Exploration Inc. is headquartered in Calgary, Canada.

How the Company Makes Money

Headwater Exploration generates revenue primarily through the exploration and production of crude oil and natural gas. The company's revenue model is largely driven by the sale of hydrocarbons extracted from its properties. Key revenue streams include the direct sale of oil and gas to various markets, as well as potential revenue from joint ventures and partnerships that may enhance its operational capabilities and market reach. Additionally, fluctuations in commodity prices significantly impact earnings, as higher prices for oil and gas can lead to increased revenues. The company may also benefit from strategic partnerships that allow for shared development costs and expanded access to resources.

Headwater Exploration Financial Statement Overview

Summary

Headwater Exploration demonstrates strong profitability with high net profit and EBIT margins. The balance sheet is robust with minimal leverage, and cash flow generation is strong despite a decline in free cash flow growth. Challenges include negative revenue growth and declining free cash flow, but overall financial health remains solid.

Income Statement

Headwater Exploration shows strong profitability with a consistent net profit margin around 30% and a solid EBIT margin of 40% in the TTM. However, the revenue growth rate has turned negative at -3.09% in the TTM, indicating a potential slowdown in sales. Despite this, the company maintains robust gross profit margins above 50%, suggesting efficient cost management.

Balance Sheet

The company's balance sheet is strong with a very low debt-to-equity ratio of 0.0033, indicating minimal leverage and financial risk. The return on equity is healthy at 25.97%, reflecting efficient use of equity to generate profits. The equity ratio stands at 74.79%, showcasing a solid equity base relative to total assets.

Cash Flow

Headwater Exploration's cash flow position is stable, with an operating cash flow to net income ratio of 2.57, indicating strong cash generation relative to net income. However, free cash flow growth has declined by 19.53% in the TTM, which could be a concern if this trend continues. The free cash flow to net income ratio is 0.29, suggesting a moderate conversion of net income to free cash flow.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	603.71M	619.80M	425.55M	458.38M	190.94M	9.50M
Gross Profit	314.47M	332.06M	193.33M	266.00M	108.10M	49.00K
EBITDA	359.01M	372.81M	324.89M	291.97M	95.66M	5.49M
Net Income	172.80M	188.03M	156.07M	162.11M	45.83M	6.71M
Balance Sheet
Total Assets	1.01B	952.64M	836.34M	734.74M	488.81M	300.69M
Cash, Cash Equivalents and Short-Term Investments	124.35M	142.69M	146.05M	175.45M	114.70M	76.77M
Total Debt	13.78M	15.64M	842.00K	861.00K	1.55M	436.00K
Total Liabilities	254.46M	253.18M	225.84M	191.41M	91.02M	31.66M
Stockholders Equity	752.38M	699.46M	610.50M	543.34M	397.79M	269.03M
Cash Flow
Free Cash Flow	85.55M	93.87M	63.25M	35.00M	-28.73M	-34.83M
Operating Cash Flow	300.49M	316.74M	303.32M	283.93M	111.66M	230.00K
Investing Cash Flow	-212.70M	-226.85M	-243.71M	-232.06M	-109.13M	-34.40M
Financing Cash Flow	-102.38M	-93.24M	-89.00M	8.88M	35.40M	49.99M

Headwater Exploration Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 9.10
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Positive
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TSE:HWX, the sentiment is Positive. The current price of 9.1 is above the 20-day moving average (MA) of 8.98, above the 50-day MA of 8.07, and above the 200-day MA of 6.84, indicating a bullish trend. The MACD of 0.35 indicates Positive momentum. The RSI at 61.38 is Neutral, neither overbought nor oversold. The STOCH value of 29.85 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for TSE:HWX.

Headwater Exploration Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
HWX	79 Outperform	$2.16B	12.43	23.55%	4.73%	6.44%	-6.74%
PXT	74 Outperform	$1.67B	10.68	5.77%	8.55%	-20.07%	-53.33%
BIR	70 Neutral	$1.83B	23.68	3.16%	2.38%	-9.76%	374.65%
AAV	70 Neutral	$2.02B	34.06	3.69%	―	27.84%	28.87%
FRU	69 Neutral	$2.28B	18.19	13.00%	7.08%	2.52%	-8.32%
Sector *	65 Neutral	$15.17B	7.61	4.09%	5.20%	3.87%	-62.32%
VET	64 Neutral	$1.92B	-8.25	2.34%	4.01%	-2.32%	70.14%

Headwater Exploration Corporate Events

Headwater Exploration Unveils 2026 Budget and Operations Update

Headwater Exploration Inc. has announced its preliminary 2026 budget, highlighting a capital expenditure of $185 million aimed at maintenance, growth, secondary recovery, and exploration. The company plans to achieve an 8% production growth per share, supported by a 37% reinvestment rate from adjusted funds flow, while maintaining a quarterly dividend. Recent operations updates reveal successful exploration and secondary recovery efforts in the Greater Pelican area, which have significantly reduced corporate decline rates and maintenance capital. The company aims to continue enhancing asset duration and shareholder value through strategic investments in secondary recovery and exploration.

Headwater Exploration Reports Q3 2025 Results and Declares Dividend

Headwater Exploration Inc. reported its third-quarter financial and operational results for 2025, showing a slight decline in sales and adjusted funds flow from operations compared to the previous year. Despite a decrease in net income, the company increased its average daily production of heavy crude oil and natural gas, which contributed to a rise in capital expenditures. Headwater also declared a quarterly dividend, reflecting its commitment to returning value to shareholders. The results indicate a stable operational performance amidst fluctuating market conditions.

Headwater Exploration Boosts 2025 Production Guidance Amid Operational Success

Headwater Exploration Inc. has announced an increase in its 2025 production guidance due to exceptional exploration results in Greater Pelican and the Grand Rapids formation in Marten Hills West. The company plans to reallocate capital towards sustainability initiatives and additional exploration, expecting a significant production increase with reduced development costs. This strategic move positions Headwater for growth while maintaining financial flexibility, benefiting stakeholders by enhancing operational efficiency and sustainability.