Gulfport Energy Stock Is a Strong Buy Fueled by Natural Gas Momentum
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Natural gas has been on a notable uptrend, catalyzed by frigid temperatures that have driven heating demand across the United States. This momentum has propelled shares of gas-focused companies like Gulfport Energy GPOR, which has gained 30% over the past three months. Gulfport has outperformed its peers such as Coterra Energy CTRA and Range Resources RRC, showcasing its strong position in the market.GPOR, CTRA, RRC 3-Month Stock Performance Image Source: Zacks Investment ResearchAbout Gulfport EnergyGulfport Energy is a natural gas-focused exploration and production company headquartered in Oklahoma City, OK. Operating primarily in the Utica Shale in Ohio and the SCOOP play in Oklahoma, Gulfport has emerged from bankruptcy with a stronger balance sheet and a free cash flow-oriented strategy. Of its total production, more than 90% comprises natural gas.Natural gas prices have surged some 70% since mid-October, briefly surpassing the $4 mark last week. This dramatic rise was fueled by a confluence of factors, positioning natural gas producers like Gulfport Energy to capitalize on the rally. The company stands to benefit significantly as the commodity gains momentum in a tightening market.Strength in GPOR’s Financial MetricsRobust Earnings Growth & Attractive Valuation: Gulfport Energy is set to deliver an impressive financial performance, with the Zacks Consensus Estimate for 2024 and 2025 EPS reflecting year-over-year growth of 108.5% and 51%, respectively. This growth outlook is supported by disciplined capital allocation and operational efficiencies. Moreover, Gulfport’s stock is attractively valued, trading at a forward price/earnings ratio of 8.49. This is well below the Zacks Oil and Gas - Exploration & Production - U.S. industry. The company has a Value Score of A. Image Source: Zacks Investment ResearchFind the latest EPS estimates and surprises on Zacks Earnings Calendar.Strong Free Cash Flow and Shareholder Returns: Gulfport delivered $73 million in adjusted free cash flow during Q3 2024, exceeding expectations. The board expanded the stock repurchase authorization by 54%, raising it to $1 billion. As of late October, Gulfport had repurchased 5.2 million shares, lowering its share count by 18%. These actions reflect a commitment to returning value to shareholders while maintaining a robust financial position.Gulfport’s Operational Efficiencies and Strategic FocusEfficient Cost Management Supports Margin Growth: Gulfport Energy’s focus on cost efficiency has been a significant driver of its financial health and margin improvements. During 2024, the company achieved over $25 million in capital savings on drilling and completion activities, with two-thirds of these savings attributed to operational efficiencies and cycle-time reductions. This strategic approach has allowed Gulfport to lower its 2024 capital expenditure guidance by approximately 4%, targeting a range of $325-$335 million.Liquids Production Boost: Gulfport’s focus on liquids-weighted assets further strengthens its profitability. With over 60% of 2025 turn-in-line wells expected to produce liquids, the company is well-positioned to benefit from higher-margin production streams.Strategic Reserves and Geographic Positioning: Operating in resource-rich regions like Ohio’s Utica play and Oklahoma’s SCOOP formation, Gulfport holds 4.2 trillion cubic feet equivalent of proved reserves. This reserve base supports long-term production stability, enabling the company to capitalize on favorable market conditions. Image Source: Gulfport Energy CorporationMitigating GPOR’s RisksWhile Gulfport's reliance on natural gas prices introduces volatility, the company has effectively hedged 65% of its 2024 production at $3.63/MMBtu. This strategy provides short-term stability, though it may limit upside during bullish price scenarios. Additionally, regional pricing constraints and lower spot prices in Appalachia could compress margins.Conclusion: Gulfport is a Strong BuyGulfport Energy stands out as a compelling investment opportunity in the natural gas sector. Its robust free cash flow, disciplined cost management, and focused strategy create a strong foundation for growth. With natural gas demand expected to remain elevated in the near term, Gulfport is well-positioned to deliver significant returns. The stock’s current undervaluation and promising EPS growth reinforce its status as a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.Free: 5 Stocks to Buy As Infrastructure Spending SoarsTrillions of dollars in Federal funds have been earmarked to repair and upgrade America’s infrastructure. In addition to roads and bridges, this flood of cash will pour into AI data centers, renewable energy sources and more.In, you’ll discover 5 surprising stocks positioned to profit the most from the spending spree that’s just getting started in this space.Download How to Profit from the Trillion-Dollar Infrastructure Boom absolutely free today.Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Range Resources Corporation (RRC): Free Stock Analysis Report Gulfport Energy Corporation (GPOR): Free Stock Analysis Report Coterra Energy Inc. (CTRA): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks
Quelle: Zacks