Headwater Exploration (HWX) AI Stock Analysis

• Market Cap: $2.12B
• Dividend Yield: 5.81%
• Average Volume (3M): 646.86K
• Price to Earnings (P/E): 11.8
• Beta (1Y): 1.28
• 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: 720,864
• 30 Day Avg. Volume: 646,858
• 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: 0.80
• Enterprise Value/Revenue: 2.79
• Enterprise Value/Gross Profit: 5.31
• Enterprise Value/Ebitda: 4.55
• 1Y Price Target: $8.98
• Price Target Upside: 1.26% Upside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 4
• EPS Forecast (FY): 0.75
• Revenue Forecast (FY): $593.19M

• Rating: 73 Outperform
• Price Target: C$10.00 ▲(12.74% Upside)

Headwater Exploration's strong financial performance and attractive valuation are key strengths, supported by robust profitability and a solid balance sheet. Technical indicators show strong momentum, but overbought conditions suggest caution. The absence of earnings call and corporate events data does not impact the score.

Positive Factors

Strong Profitability

The company's strong profitability, with a consistent net profit margin around 30% and a solid EBIT margin of 40%, indicates efficient operations and cost management, which are crucial for sustaining long-term financial health.

Solid Balance Sheet

A strong balance sheet with minimal leverage provides financial stability and flexibility, allowing the company to invest in growth opportunities and weather economic downturns without significant financial strain.

Efficient Cash Generation

Efficient cash generation ensures that the company can fund its operations and growth initiatives internally, reducing reliance on external financing and enhancing long-term sustainability.

Negative Factors

Declining Free Cash Flow

A decline in free cash flow growth could limit the company's ability to invest in new projects or return capital to shareholders, potentially impacting future growth and shareholder value.

Negative Revenue Growth

Negative revenue growth suggests potential challenges in market demand or competitive pressures, which could affect the company's ability to maintain its market position and profitability over time.

Earnings Decline

A decline in earnings per share indicates potential issues in profitability or increased costs, which could affect investor confidence and the company's ability to fund future growth initiatives.

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 a consistent net profit margin and a solid EBIT margin. The balance sheet is robust with minimal leverage, and cash flow generation is strong despite a decline in free cash flow growth. The main challenge is the negative revenue growth rate.

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	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	14.54M	15.64M	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: 8.87
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Negative
• RSI: Negative
• STOCH: Negative

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 8.87 is above the 20-day moving average (MA) of 7.73, above the 50-day MA of 7.53, and above the 200-day MA of 6.61, indicating a bullish trend. The MACD of 0.31 indicates Negative momentum. The RSI at 78.98 is Negative, neither overbought nor oversold. The STOCH value of 96.85 is Negative, 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	73 Outperform	$2.12B	11.83	23.55%	5.81%	6.44%	-6.74%
PXT	71 Outperform	$1.85B	11.64	5.77%	8.60%	-20.07%	-53.33%
BIR	66 Neutral	$1.83B	23.68	3.16%	2.59%	-9.76%	374.65%
Sector *	65 Neutral	$15.17B	7.61	4.09%	5.20%	3.87%	-62.32%
VET	63 Neutral	$1.59B	-8.61	2.34%	3.94%	-2.32%	70.14%
KEL	62 Neutral	$1.36B	18.26	5.22%	―	9.92%	2.74%
MER	45 Neutral	C$1.23B	9.51	9.15%	8.57%	―	―

Headwater Exploration Corporate Events

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.

The most recent analyst rating on (TSE:HWX) stock is a Buy with a C$8.00 price target. To see the full list of analyst forecasts on Headwater Exploration stock, see the TSE:HWX Stock Forecast page.

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.

The most recent analyst rating on (TSE:HWX) stock is a Buy with a C$7.50 price target. To see the full list of analyst forecasts on Headwater Exploration stock, see the TSE:HWX Stock Forecast page.