Headwater Exploration (HWX) AI Stock Analysis

• Market Cap: C$1.38B
• Dividend Yield: 7.08%
• Average Volume (3M): 850.72K
• Price to Earnings (P/E): 7.3
• Beta (1Y): 1.09
• Revenue Growth: 20.20%
• EPS Growth: 19.79%
• Country: CA
• Employees: 38
• Sector: Energy
• Sector Strength: 55
• Industry: Oil & Gas Exploration & Production
• EPS (TTM): 0.79
• Shares Outstanding: 237,774,460
• 10 Day Avg. Volume: 479,122
• 30 Day Avg. Volume: 850,716
• PEG Ratio: 0.37
• Price to Book (P/B): N/A
• Price to Sales (P/S): 0.00
• Price to Cash Flow (P/CF): 0.00
• P/FCF Ratio: 0.00
• 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$8.52
• Price Target Upside: 49.03% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 5

Headwater Exploration's stock score reflects its strong financial health, characterized by robust revenue growth, high profitability margins, and minimal debt, which positions the company well for future growth. The valuation is attractive with a low P/E ratio and a high dividend yield. However, technical analysis indicates bearish momentum, as the stock is trading below key moving averages. Despite mixed technical signals, the company's solid fundamentals and generous dividend yield support a positive outlook.

Positive Factors

Economic Viability

The Clearwater formation is one of the most economic plays in Canada, and Headwater is among the few 'pure play' companies that has exposure to it.

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.

Profitability

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

Negative Factors

Exploration Risks

Emerging new exploration plays outside the Clearwater present potential risks alongside opportunities.

Headwater Exploration Business Overview & Revenue Model

Company Description

Headwater Exploration Inc. is a Canadian resource company engaged in the exploration, development, and production of oil and natural gas. Operating primarily within the energy sector, the company is focused on leveraging its expertise to efficiently and sustainably extract hydrocarbons while maximizing shareholder value. Headwater Exploration's core products include crude oil and natural gas, which are extracted from its strategically located assets in Canada.

How the Company Makes Money

Headwater Exploration Inc. generates revenue primarily through the sale of crude oil and natural gas. The company extracts these resources from its Canadian operational sites and sells them to various buyers, including refineries and energy distributors. Revenue is affected by factors such as production volumes, commodity prices, and operational efficiency. Partnerships with other energy companies and investments in technology to improve extraction and operational processes also contribute to its earnings. Additionally, Headwater Exploration may enter into hedging contracts to manage price volatility, which can impact its 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: Negative
• Last Price: 5.72
• 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 TSE:HWX, the sentiment is Negative. The current price of 5.72 is above the 20-day moving average (MA) of 5.68, below the 50-day MA of 6.01, and below the 200-day MA of 6.44, indicating a neutral trend. The MACD of -0.07 indicates Negative momentum. The RSI at 47.00 is Neutral, neither overbought nor oversold. The STOCH value of 59.01 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for TSE:HWX.

Headwater Exploration Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
WCP	77 Outperform	$4.86B	5.36	16.40%	8.91%	5.56%	35.85%
TOU	73 Outperform	C$22.26B	16.80	8.55%	2.44%	-8.29%	-30.52%
ARX	71 Outperform	$15.71B	14.19	14.67%	2.76%	-9.83%	-27.76%
CVE	70 Outperform	$28.83B	9.42	10.88%	4.27%	3.97%	-22.22%
HWX	69 Neutral	C$1.38B	7.29	28.90%	7.08%	20.20%	19.79%
BTE	68 Neutral	$1.77B	7.78	5.99%	4.11%	22.71%	―
Sector *	56 Neutral	$7.14B	3.56	-6.61%	5.99%	>-0.01%	-50.21%

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.