Gran Tierra Energy, Inc. – Value Analysis (NYSE AMERICAN:GTE) : October 6, 2017

Capitalcube gives Gran Tierra Energy, Inc. a score of 22.

Our analysis is based on comparing Gran Tierra Energy, Inc. with the following peers – Ecopetrol SA Sponsored ADR, YPF SA Sponsored ADR Class D, Petroleo Brasileiro SA Sponsored ADR, GeoPark Ltd and Royal Dutch Shell Plc Sponsored ADR Class A (EC-US, YPF-US, PBR-US, GPRK-US and RDS.A-US).

Investment Outlook

Gran Tierra Energy, Inc. has a fundamental score of 22 and has a relative valuation of OVERVALUED.

Fundamental Score

Access our research and ratings on Gran Tierra Energy, Inc.

Company Overview

  • Considering peers, relative underperformance over the last year and the last month suggest a lagging position.
  • It’s current Price/Book of 0.86 is about median in its peer group.
  • GTE-US‘s EBITDA-based price implies better than peer median growth.The market seems to expect a turnaround in the company’s current EBITDA-based return on equity.
  • GTE-US‘s relatively low net margins and poor asset turns suggest a problematic operating strategy.
  • Changes in annual revenues (relative to peers) are better than the change in its earnings (relative to peers), implying the company is focused more on revenues.
  • GTE-US‘s return on assets currently and over the past five years has trailed the peer median and suggests the company might be operationally challenged relative to its peers.
  • The company’s median gross margin and relatively low pre-tax margin suggest high operating costs versus peers.
  • While GTE-US‘s revenues have increased slower than peer median, the market currently gives the company a higher than peer median Price/EBITDA ratio and may be factoring in some sort of a strategic play.
  • The company seems to be over-investing in a business with median returns.
  • GTE-US does not seem to have the flexibility to raise more debt.

Access our research and ratings on Gran Tierra Energy, Inc.

Leverage & Liquidity

GTE-US does not seem able to raise more debt easily.

  • GTE-US‘s debt at 24.27% of its enterprise value compared to an overall benchmark of 25% (Note: The peer median is currently 51.04%), and interest coverage level of 3.16x, would make major new borrowings difficult.
  • All 5 peers for the company have an outstanding debt balance.

GTE-US has moved to a relatively high liquidity from a Constrained profile at the recent year-end.

  • GTE-US‘s interest coverage has increased 3.58 points from last year’s low but is still below its five-year average interest coverage of 749.14.
  • The increase in its interest coverage to 3.16x from -0.42x (in 2016) was also accompanied by an increase in its peer median during this period to 2.27x from 0.82x.
  • Interest coverage rose 2.13 points relative to peers (and is now higher than its peer median). It is also above the 2.50x coverage benchmark unlike the peer median.
  • GTE-US‘s debt-EV is its highest relative to the last five years and compares to a low of 0% in 2015.
  • While its debt-EV increased to 24.27% from 14.41% (in 2016), its peer median decreased during this period to 51.04% from 58.30%.
  • Relative to peers, debt-EV rose 17.12 percentage points. Unlike the peer median, it is also below the 25% leverage benchmark.

Access the detailed analysis for Gran Tierra Energy, Inc.

Key Liquidity Items

Company Debt/Enterprise Value (%) Current Ratio Interest Coverage (x) Cash Flow To Total Debt (%)
Ecopetrol SA Sponsored ADR 54.42 1.31 3.01 31.52
YPF SA Sponsored ADR Class D 64.69 1.24 0.57 33.26
Petroleo Brasileiro SA Sponsored ADR 87.71 2.04 1.53 20.82
GeoPark Ltd 46.13 1.09 1.31 21.65
Royal Dutch Shell Plc Sponsored ADR Class A 47.66 1.24 3.36 38.71
Gran Tierra Energy Inc. 24.27 1.33 3.16 66.66
Peer Median 51.04 1.27 2.27 32.39
Best In Class 24.27 2.04 3.36 66.66

Looking for more metrics and analysis for Gran Tierra Energy, Inc.?

Company Profile

Gran Tierra Energy, Inc. engages in the exploration and production of oil and natural gas. It operates through the following geographical segments: Colombia, Peru, Brazil, and All Other. The company was founded on June 6, 2003 and is headquartered in Calgary, Canada.

Disclaimer

The information presented in this report has been obtained from sources deemed to be reliable, but AnalytixInsight does not make any representation about the accuracy, completeness, or timeliness of this information. This report was produced by AnalytixInsight for informational purposes only and nothing contained herein should be construed as an offer to buy or sell or as a solicitation of an offer to buy or sell any security or derivative instrument. This report is current only as of the date that it was published and the opinions, estimates, ratings and other information may change without notice or publication. Past performance is no guarantee of future results. Prior to making an investment or other financial decision, please consult with your financial, legal and tax advisors. AnalytixInsight shall not be liable for any party’s use of this report. AnalytixInsight is not a broker-dealer and does not buy, sell, maintain a position, or make a market in any security referred to herein. One of the principal tenets for us at AnalytixInsight is that the best person to handle your finances is you. By your use of our services or by reading any our reports, you’re agreeing that you bear responsibility for your own investment research and investment decisions. You also agree that AnalytixInsight, its directors, its employees, and its agents will not be liable for any investment decision made or action taken by you and others based on news, information, opinion, or any other material generated by us and/or published through our services. For a complete copy of our disclaimer, please visit our website www.analytixinsight.com.