Birchcliff Energy Ltd. (BIREF - Get Rating), an intermediate oil and natural gas company, acquires, explores for, develops, and produces natural gas, light oil, condensate, and natural gas liquids in Western Canada. The stock has gained 100.1% over the past year to close its last trading session at $7.37.

Supported by its impressive adjusted fund flows, the company reduced its total debt by 47% as of March 31, 2022. Jeff Tonken, Chief Executive Officer of Birchcliff, said, “We continue to be committed to maximizing free funds flow generation and significantly reducing indebtedness.”

The company has also increased its full-year 2022 targets for adjusted funds flow to $1.18 billion and free funds flow to $920 million to $940 million based on current strip pricing and updated its five-year plan for 2022 to 2026. Its average quarterly production was 76,024 boe/d, a 1% increase from its prior-year quarter.

Furthermore, BIREF’s board of directors declared a quarterly cash dividend of $0.02 per common share for the quarter ending June 30, 2022, which represents a 100% increase over the previous quarter. The company is also currently targeting an increase in its annual dividend in 2023 to at least $0.80 per common share, which is expected to be paid quarterly at a rate of $0.20 per share, commencing with the quarter ending March 31, 2023.

Here is what could influence BIREF’s performance:

Robust Financials

For the first quarter ending March 31, 2022, BIREF’s petrol and natural gas revenue increased 54.1% year-over-year to $285.98 million. Its net income improved 467.5% from its year-ago value to $125.79 million, while its adjusted fund flow increased 109% from the prior-year quarter to $183.70 million.

The company’s cash from operating activities came in at $154.20 million, up 87% from its year-ago value.

Strong Profitability

BIREF’s trailing-12-month net income margin of 43.55% is 574.4% higher than the industry average of 6.46%. In addition, its trailing-12-month gross profit margin of 72.43% is 82.1% higher than the 39.77% industry average. Also, its trailing-12-month ROE, ROC, and ROA are 100.2%, 173.4%, and 250.9% higher than the respective industry averages.

Consensus Rating and Price Target Indicate Potential Upside

Out of the nine Wall Street analysts that rated BIREF, eight rated it Buy, and one rated it hold. The 12-month median price target of $10.00 indicates a 35.8% potential upside. The price targets range from a low of $8.55 to a high of $12.44.

POWR Ratings Reflect Solid Prospects

BIREF has an overall B grade, which equates to a Buy in our proprietary POWR Ratings system. The POWR Ratings are calculated by considering 118 distinct factors, with each factor weighted to an optimal degree.

Our proprietary rating system also evaluates each stock based on eight distinct categories. BIREF also has an A grade for Momentum and a B for Growth and Quality.

The company’s Momentum grade is justified given that it is trading above its 200-day moving average of $6.34. BIREF’s impressive financials is in sync with the Growth grade. In addition, its strong profitability is consistent with its Quality grade.

Among the 97 stocks in the B-rated Energy – Oil & Gas industry, BIREF is ranked #11.

Beyond what I stated above, we have graded BIREF for Value, Sentiment, and Stability. Click here to see all BIREF ratings.

Bottom Line

The company’s shares have surged 36.4% over the past six months. BIREF has shown remarkable financial performance in the first quarter and is expected to witness solid growth. Given the company’s robust profitability, we think it could be a solid addition to one’s portfolio.

How does Birchcliff Energy Ltd. (BIREF) Stack Up Against its Peers?

BIREF has an overall POWR Rating of B, which equates to Buy. Check out these other stocks within the Energy – Oil & Gas industry with A (Strong Buy) ratings: Whitecap Resources, Inc. (SPGYF - Get Rating), Marathon Petroleum Corp. (MPC - Get Rating), and Valero Energy Corp. (VLO - Get Rating).

BIREF shares were unchanged in after-hours trading Thursday. Year-to-date, BIREF has gained 38.68%, versus a -12.15% rise in the benchmark S&P 500 index during the same period.

About the Author: Spandan Khandelwal

Spandan's is a financial journalist and investment analyst focused on the stock market. With her ability to interpret financial data, she aims to help investors evaluate the fundamentals of a company before investing. More...

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