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Headwater Exploration (TSE:HWX)
TSX:HWX

Headwater Exploration (HWX) AI Stock Analysis

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Headwater Exploration

(TSX:HWX)

Rating:76Outperform
Price Target:
C$7.00
▲(10.06%Upside)
Headwater Exploration's strong financial performance and appealing valuation are key strengths, offset by mixed technical indicators. The company's ability to maintain high profitability and manage cash flows efficiently supports its resilience in the oil & gas sector, while the favorable valuation provides additional upside potential.
Positive Factors
Exploration 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.
Future Prospects
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.
Negative Factors

Headwater Exploration (HWX) vs. iShares MSCI Canada ETF (EWC)

Headwater Exploration Business Overview & Revenue Model

Company DescriptionHeadwater 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 MoneyHeadwater 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 demonstrates strong financial performance with robust profitability and efficient operations. The company has a healthy gross profit margin of 54.06% and a net profit margin of 32.00%. Revenue growth is consistent, and the balance sheet is stable with low leverage and high equity ratio. Cash flow management is effective, further supporting financial resilience.
Income Statement
86
Very Positive
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
78
Positive
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
82
Very Positive
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
TTMDec 2024Dec 2023Dec 2022Dec 2021Dec 2020
Income StatementTotal Revenue
626.27M619.80M425.55M458.38M190.94M9.50M
Gross Profit
338.58M332.06M193.33M266.00M108.10M49.00K
EBIT
202.81M241.00M179.60M210.88M69.94M-8.20M
EBITDA
391.20M372.81M324.89M287.96M95.66M5.49M
Net Income Common Stockholders
200.41M188.03M156.07M162.11M45.83M6.71M
Balance SheetCash, Cash Equivalents and Short-Term Investments
125.55M142.69M146.05M175.45M114.70M76.77M
Total Assets
967.46M952.64M836.34M734.74M488.81M300.69M
Total Debt
2.57M2.72M842.00K861.00K1.55M436.00K
Net Debt
-122.98M-139.97M-145.21M-174.59M-113.15M-76.34M
Total Liabilities
244.03M253.18M225.84M191.41M91.02M31.66M
Stockholders Equity
723.43M699.46M610.50M543.34M397.79M269.03M
Cash FlowFree Cash Flow
111.18M93.87M63.25M35.00M-28.73M-34.83M
Operating Cash Flow
331.63M316.74M303.32M283.93M111.66M230.00K
Investing Cash Flow
-238.37M-226.85M-243.71M-232.06M-109.13M-34.40M
Financing Cash Flow
-94.28M-93.24M-89.00M8.88M35.40M49.99M

Headwater Exploration Technical Analysis

Technical Analysis Sentiment
Positive
Last Price6.36
Price Trends
50DMA
5.98
Positive
100DMA
6.25
Positive
200DMA
6.37
Negative
Market Momentum
MACD
0.12
Negative
RSI
59.76
Neutral
STOCH
59.52
Neutral
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 6.36 is above the 20-day moving average (MA) of 6.18, above the 50-day MA of 5.98, and below the 200-day MA of 6.37, indicating a neutral trend. The MACD of 0.12 indicates Negative momentum. The RSI at 59.76 is Neutral, neither overbought nor oversold. The STOCH value of 59.52 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for TSE:HWX.

Headwater Exploration Peers Comparison

Overall Rating
UnderperformOutperform
Sector (57)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
TSHWX
76
Outperform
$1.51B7.5429.87%6.59%20.48%21.66%
57
Neutral
$7.14B3.05-3.47%5.74%0.77%-49.70%
VEVET
$1.05B-1.19%5.49%
$1.32B13.526.10%5.05%
$895.67M-25.82%7.58%
$997.36M26.304.98%
$965.47M12.074.22%11.26%
* Energy Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
TSE:HWX
Headwater Exploration
6.36
-0.16
-2.45%
VET
Vermilion Energy
6.79
-4.15
-37.93%
BIREF
Birchcliff Energy
4.86
0.82
20.30%
AOIFF
Africa Oil
1.33
-0.35
-20.83%
KELTF
Kelt Exploration
5.03
0.67
15.37%
PARXF
Parex Resources
10.05
-3.89
-27.91%

Headwater Exploration Corporate Events

Executive/Board ChangesShareholder Meetings
Headwater Exploration Inc. Announces Successful Shareholder Meeting Outcomes
Positive
May 9, 2025

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.

DividendsFinancial Disclosures
Headwater Exploration Reports Strong 2024 Financial Results and Declares Dividend
Positive
Mar 13, 2025

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.

Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.