Headwater Exploration (HWX) AI Stock Analysis

• Market Cap: C$1.75B
• Dividend Yield: 5.87%
• Average Volume (3M): 603.49K
• Price to Earnings (P/E): 9.4
• Beta (1Y): 1.18
• Revenue Growth: 8.47%
• EPS Growth: -1.60%
• 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: 474,122
• 30 Day Avg. Volume: 603,490
• PEG Ratio: N/A
• Price to Book (P/B): N/A
• Price to Sales (P/S): N/A
• P/FCF Ratio: N/A
• 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$9.00
• Price Target Upside: 22.84% Upside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 4

• Rating: 73 Outperform
• Price Target: C$8.00 ▲(9.14% Upside)

Headwater Exploration's overall stock score is driven by strong financial performance and attractive valuation. The company's robust profitability and low leverage are significant strengths, while the negative revenue growth and declining free cash flow are concerns. Technical indicators present a mixed picture, but the stock's undervaluation and high dividend yield enhance its appeal.

Positive Factors

Balance Sheet Strength

A strong balance sheet with minimal leverage reduces financial risk and enhances the company's ability to invest in growth opportunities.

Profitability

High profitability indicates efficient operations and cost management, supporting sustainable growth and shareholder returns.

Cash Generation

Strong cash generation enhances financial flexibility, allowing for reinvestment in business expansion and shareholder value initiatives.

Negative Factors

Revenue Growth

Negative revenue growth suggests potential challenges in market demand or competitive pressures, which could impact future earnings.

Free Cash Flow Decline

A decline in free cash flow growth may limit the company's ability to fund new projects or return capital to shareholders, affecting long-term growth.

Earnings Growth

Negative earnings per share growth indicates potential profitability challenges, which could impact investor confidence and stock performance.

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 demonstrates strong profitability with a consistent net profit margin and solid EBIT margin. The balance sheet is robust with minimal leverage, and the company has a healthy return on equity. However, challenges include negative revenue growth and declining free cash flow.

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	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: 7.33
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Positive
• RSI: Neutral
• 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 7.33 is below the 20-day moving average (MA) of 7.33, above the 50-day MA of 7.17, and above the 200-day MA of 6.52, indicating a neutral trend. The MACD of >-0.01 indicates Positive momentum. The RSI at 52.09 is Neutral, neither overbought nor oversold. The STOCH value of 80.47 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
PXT	―	C$1.79B	10.36	6.62%	8.32%	-20.60%	-56.33%
HWX	―	C$1.75B	9.41	25.93%	5.87%	8.47%	-1.60%
Sector *	―	$15.17B	7.61	4.09%	5.20%	3.87%	-62.32%
KEL	―	$1.23B	16.47	6.73%	―	6.97%	9.34%
BIR	―	$1.74B	22.55	3.27%	3.03%	-15.60%	85.49%
VET	―	$1.63B	-8.79	4.40%	4.93%	-1.60%	76.21%
MER	―	C$1.18B	―	-26.19%	6.01%	―	-523.86%

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.