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  5. HME: These were two energy companies on your blog with large percentage upward revision estimates of EBIT. [Hemisphere Energy Corporation]
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Q: These were two energy companies on your blog with large percentage upward revision estimates of EBIT. What is your assessment of them? Would you recommend purchasing either of them?
Asked by David on April 12, 2024
5i Research Answer:

HME looks interesting here - it trades at a cheap valuation of 5.4X forward earnings and pays close to a 6% dividend yield. Margins are strong, and it uses most of its free cash flow to repurchase shares and issue dividends. It has a net cash position of $1.6M, and insiders have been buyers recently. We think the name looks attractive here, but we would be mindful of its small size and higher risks.

IPCO is larger, does not pay a dividend, but has a stronger buyback policy. It trades at a higher valuation of 11X forward earnings, but its margins are strong and consistent, and it has a robust balance sheet. We like this name for its strong buyback, balance sheet, and larger size ($2B market cap). 

Both names look interesting and each have their own merits.