Long-established in the Oil & Gas industry, HighPeak Energy Inc (HPK, Financial) has enjoyed a stellar reputation. However, it has recently witnessed a daily loss of 6.37%, juxtaposed with a three-month change of 28.16%. Fresh insights from the GF Score hint at potential headwinds. Notably, its diminished rankings in financial strength, growth, and valuation suggest that the company might not live up to its historical performance. Join us as we dive deep into these pivotal metrics to unravel the evolving narrative of HighPeak Energy Inc.
Understanding the GF Score
The GF Score is a stock performance ranking system developed by GuruFocus using five aspects of valuation, which has been found to be closely correlated to the long-term performances of stocks by backtesting from 2006 to 2021. The stocks with a higher GF Score generally generate higher returns than those with a lower GF Score. Therefore, when picking stocks, investors should invest in companies with high GF Scores. The GF Score ranges from 0 to 100, with 100 as the highest rank.
- Financial strength rank: 5/10
- Profitability rank: 4/10
- Growth rank: 0/10
- GF Value rank: 2/10
- Momentum rank: 4/10
Based on the above method, GuruFocus assigned HighPeak Energy Inc the GF Score of 52 out of 100, which signals poor future outperformance potential.
HighPeak Energy Inc: A Snapshot
HighPeak Energy Inc is an independent oil and natural gas company focused on the development of unconventional oil and natural gas reserves in primarily Howard County of the Midland Basin. The company operates in a single segment, which is oil and natural gas development, exploration, and production. With a market cap of $1.89 billion and sales of $926.58 million, the company has an operating margin of 46%.
Financial Strength Analysis
HighPeak Energy Inc's financial strength indicators present some concerning insights about the company's balance sheet health. The company's interest coverage ratio of 4.59 positions it worse than 65.13% of 760 companies in the Oil & Gas industry. This ratio highlights potential challenges the company might face when handling its interest expenses on outstanding debt. The company's Altman Z-Score is just 1.37, which is below the distress zone of 1.81. This suggests that the company may face financial distress over the next few years. Additionally, the company's low cash-to-debt ratio at 0.03 indicates a struggle in handling existing debt levels.
Profitability Analysis
HighPeak Energy Inc's low Profitability rank can also raise warning signals.
Growth Prospects
A lack of significant growth is another area where HighPeak Energy Inc seems to falter, as evidenced by the company's low Growth rank.
Conclusion
Given the company's financial strength, profitability, and growth metrics, the GF Score highlights the firm's unparalleled position for potential underperformance. It's crucial for investors to consider these factors when making investment decisions. GuruFocus Premium members can find more companies with strong GF Scores using the following screener link: GF Score Screen.
