Headwater Exploration (HWX) AI Stock Analysis

• Market Cap: C$1.65B
• Dividend Yield: 6.1%
• Average Volume (3M): 536.97K
• Price to Earnings (P/E): 8.9
• Beta (1Y): 1.17
• Revenue Growth: 8.47%
• EPS Growth: -1.60%
• Country: CA
• Employees: 38
• Sector: Energy
• Sector Strength: 49
• Industry: Oil & Gas Exploration & Production
• EPS (TTM): 0.16
• Shares Outstanding: 237,762,880
• 10 Day Avg. Volume: 731,313
• 30 Day Avg. Volume: 536,972
• 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: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: C$8.41
• Price Target Upside: 22.10% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 3

• Rating: 78 Outperform
• Price Target: C$8.50 ▲(23.37% Upside)

Headwater Exploration's strong financial performance and attractive valuation are major strengths. While technical indicators show bullish trends, overbought signals pose short-term risks. The positive corporate events reinforce confidence in management and governance.

Positive Factors

Earnings

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

Exploration

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

Profitability

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

Negative Factors

Exploration Risks

Drilling follow-up tests to validate the pool at Little Horse South introduces uncertainty until results are confirmed.

Headwater Exploration Business Overview & Revenue Model

Company Description

Headwater Exploration Inc. is a Canadian resource company focused on the exploration, development, and production of oil and gas resources. The company operates primarily in the Western Canadian Sedimentary Basin, with a core emphasis on sustainable and responsible energy production. Headwater Exploration is dedicated to leveraging advanced technologies to optimize its resource extraction processes, ensuring efficiency and environmental stewardship.

How the Company Makes Money

Headwater Exploration makes money through the sale of crude oil and natural gas extracted from its exploration and production activities. The company's revenue model is primarily based on the production and sale of these hydrocarbons at market prices. Key revenue streams include the direct sale of oil and gas to refineries and other end-users. Additionally, strategic partnerships with other energy firms and favorable market conditions can enhance its earnings. The company's focus on cost-effective operations and technological advancements in extraction techniques also contributes to its profitability by reducing production costs and maximizing resource recovery.

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: Positive
• Last Price: 6.89
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Positive
• RSI: Neutral
• STOCH: Positive

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 6.89 is below the 20-day moving average (MA) of 7.10, above the 50-day MA of 6.85, and above the 200-day MA of 6.41, indicating a neutral trend. The MACD of 0.06 indicates Positive momentum. The RSI at 44.15 is Neutral, neither overbought nor oversold. The STOCH value of 11.66 is Positive, 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
PXT	84 Outperform	$1.55B	8.93	6.62%	9.63%	-20.60%	-56.33%
HWX	78 Outperform	C$1.65B	8.95	25.93%	6.10%	8.47%	-1.60%
Sector *	66 Neutral	$15.10B	10.40	7.41%	5.57%	4.52%	-70.52%
BIR	62 Neutral	$1.73B	12.53	6.10%	4.05%	-18.20%	260.40%
VET	58 Neutral	$1.67B	―	-1.19%	4.63%	1.04%	94.48%
KEL	57 Neutral	C$1.36B	17.99	6.73%	―	6.97%	9.34%
MER	45 Neutral	$1.20B	―	-25.82%	7.59%	―	-438.52%

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.

Headwater Exploration Inc. Announces Successful Shareholder Meeting Outcomes

Headwater Exploration Inc. announced the successful election of its board of directors during the annual and special shareholder meeting held on May 8, 2025. All proposed nominees were elected, and key resolutions, including the appointment of KPMG LLP as auditors and the approval of executive compensation and unallocated awards under the performance and restricted award plan, were passed with significant shareholder support.