Bellatrix Exploration (BXE, Financial) has been sailing through troubled waters for quite some time as weak commodity prices continue to weigh on its financials. Its earnings have been consistently falling since last year and also lagged behind the analysts' estimates by a significant margin. The company continued on the same line even as it reported its fiscal first quarter result. In fact it plunged to losses from a year ago period of profit. However, Bellatrix may find solace in the improving oil prices that have the potential to turn around its present situation. Starting with its numbers, let's see in detail what to expect from the oil producer in the days ahead.
Its revenue for the quarter fell 44.8% from a year ago period to CDN$90.18 million, while the company turned to a loss of CDN$0.07 a share compared to an EPS of CDN$0.14 last year. Indeed the numbers are quite disappointing, but if we look at its stock in the past few months, it rose considerably after touching its 52-week low in January. This was in turn led by a subsequent rise in oil prices in the past few months. Thus there is a perfect correlation between the stock and oil prices, which will benefit the company in the days ahead.
Positive indicators are emerging
However, positive cues are coming in from the macro economy. Going forward most of the analysts are optimistic about the oil prices. According to a report,
“EIA projects the Brent crude oil price will average $61/b in 2015, $1/b higher that in last month's STEO, with prices rising from an average of $54/b in the first quarter to an average of $63/b for the remainder of the year. The Brent crude oil price is projected to average $70/b in 2016, $5/b lower than in last month's STEO, reflecting an increase in forecast OPEC crude oil production in 2016.“
All in all Bellatrix looks poised for future growth. Although it does not have any forward P/E, increase in oil prices is expected to boost its earnings. Moreover, the stock has declined considerably in the past one year, opening a window of opportunity for new entrants. Also, its P/S multiple of 1.68 is quite decent compared to its peers. Therefore considering these facts Bellatrix seems to be a good long-term bet.
