Headwater Exploration (HWX) AI Stock Analysis

• Market Cap: $1.57B
• Dividend Yield: 6.23%
• Average Volume (3M): 653.28K
• Price to Earnings (P/E): 8.5
• Beta (1Y): 1.12
• Revenue Growth: 8.47%
• EPS Growth: -1.60%
• Country: CA
• Employees: 38
• Sector: Energy
• Sector Strength: 56
• Industry: Oil & Gas Exploration & Production
• EPS (TTM): 0.16
• Shares Outstanding: 237,762,880
• 10 Day Avg. Volume: 784,723
• 30 Day Avg. Volume: 653,277
• 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: 0.95
• Enterprise Value/Revenue: 2.47
• Enterprise Value/Gross Profit: 4.70
• Enterprise Value/Ebitda: 4.03
• 1Y Price Target: $8.42
• Price Target Upside: 24.93% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 3

• Rating: 73 Outperform
• Price Target: C$7.50 ▲(11.28% Upside)

Headwater Exploration's strong financial performance and attractive valuation are key strengths, providing a solid foundation despite challenges in revenue growth and cash flow. Technical indicators suggest bearish momentum, which is a concern. The absence of earnings call and corporate events data limits further insights.

Positive Factors

Future Prospects

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

Production and Reserves

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

Value Creation

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

Negative Factors

Exploration Risks

The company is now drilling 2 follow-up tests to validate the pool at Little Horse South, indicating potential exploration risks.

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 sale of crude oil and natural gas produced from its exploration and production activities. The company employs a revenue model based on the extraction and sale of hydrocarbons, which is significantly influenced by global commodity prices. Key revenue streams include direct sales of oil and gas to refiners, marketers, and other buyers in both domestic and international markets. Additionally, HWX may engage in strategic partnerships with other companies in the energy sector to enhance its operational capacity, share exploration risks, and access new technologies, further contributing to its earnings. Moreover, the company focuses on cost-effective production techniques and efficient operations to maximize profit margins, while also exploring opportunities for growth through acquisitions and development of new resources.

Headwater Exploration Financial Statement Overview

Summary

Headwater Exploration exhibits strong financial performance with high profit margins, consistent revenue growth, and a healthy balance sheet. The company maintains a low leverage and effectively manages cash flow, enhancing its financial stability in the oil & gas sector.

Income Statement

Headwater Exploration demonstrates strong financial performance in the TTM period with a robust Gross Profit Margin of 54.06% and a Net Profit Margin of 32.00%. The company has shown consistent revenue growth, particularly from 2023 to 2024 at 45.64% and a moderate increase in the latest period. The EBIT and EBITDA margins are healthy at 32.39% and 62.47% respectively, indicating efficient operations and earnings quality.

Balance Sheet

The company maintains a strong balance sheet with a low Debt-to-Equity Ratio of 0.004 and a Return on Equity of 27.70%, reflecting efficient use of equity to generate profits. The Equity Ratio stands at 74.80%, showcasing financial stability and low leverage risk. The consistent increase in stockholders' equity also signals strong financial health.

Cash Flow

Headwater has a healthy cash flow with a Free Cash Flow Growth Rate of 18.47% from 2024 to the TTM period. Operating Cash Flow to Net Income Ratio is robust at 1.65, indicating strong cash generation relative to net income. The Free Cash Flow to Net Income Ratio of 0.55 also supports the company's ability to generate cash efficiently.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	607.15M	619.80M	425.55M	458.38M	190.94M	9.50M
Gross Profit	318.88M	332.06M	193.33M	266.00M	108.10M	49.00K
EBITDA	371.62M	372.81M	324.89M	291.97M	95.66M	5.49M
Net Income	184.57M	188.03M	156.07M	162.11M	45.83M	6.71M
Balance Sheet
Total Assets	982.73M	952.64M	836.34M	734.74M	488.81M	300.69M
Cash, Cash Equivalents and Short-Term Investments	125.40M	142.69M	146.05M	175.45M	114.70M	76.77M
Total Debt	2.42M	2.72M	842.00K	861.00K	1.55M	436.00K
Total Liabilities	247.67M	253.18M	225.84M	191.41M	91.02M	31.66M
Stockholders Equity	735.05M	699.46M	610.50M	543.34M	397.79M	269.03M
Cash Flow
Free Cash Flow	89.46M	93.87M	63.25M	35.00M	-28.73M	-34.83M
Operating Cash Flow	309.90M	316.74M	303.32M	283.93M	111.66M	230.00K
Investing Cash Flow	-212.95M	-226.85M	-243.71M	-232.06M	-109.13M	-34.40M
Financing Cash Flow	-99.80M	-93.24M	-89.00M	8.88M	35.40M	49.99M

Headwater Exploration Technical Analysis

• Technical Analysis Sentiment: Neutral
• Last Price: 6.74
• 50DMA: Negative
• 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 Neutral. The current price of 6.74 is below the 20-day moving average (MA) of 6.91, below the 50-day MA of 6.94, and above the 200-day MA of 6.44, indicating a neutral trend. The MACD of -0.06 indicates Positive momentum. The RSI at 43.00 is Neutral, neither overbought nor oversold. The STOCH value of 25.79 is Neutral, 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
HWX	73 Outperform	$1.57B	8.51	25.93%	6.23%	8.47%	-1.60%
Sector *	65 Neutral	$15.26B	7.31	3.02%	5.32%	4.27%	-62.52%
VET	―	$1.16B	―	4.40%	4.67%	―	―
BIREF	―	$1.25B	23.06	3.27%	4.07%	―	―
AOIFF	―	$872.48M	―	-26.19%	7.34%	―	―
KELTF	―	$994.85M	18.34	6.73%	―	―	―
PARXF	―	$1.21B	9.70	6.62%	8.84%	―	―

Headwater Exploration Corporate Events

Headwater Exploration Reports Q2 Results and Increases Dividend

Headwater Exploration Inc. reported its second quarter financial and operational results for 2025, showing a decline in total sales and net income compared to the previous year. Despite a 12% decrease in total sales for the quarter, the company declared a quarterly dividend, reflecting a 10% increase per share. The results indicate a challenging period for Headwater, with a notable drop in adjusted funds flow from operations and cash flow provided by operating activities. However, the company experienced growth in average daily production, particularly in natural gas and natural gas liquids, which could positively impact future performance. The announcement highlights Headwater’s commitment to returning value to shareholders through dividends, despite the financial challenges faced in the quarter.

The most recent analyst rating on (TSE:HWX) stock is a Hold with a C$9.00 price target. To see the full list of analyst forecasts on Headwater Exploration stock, see the TSE:HWX Stock Forecast page.