Houston American Energy Corp. :HUSA-US: Earnings Analysis: Q3, 2016 By the Numbers : November 11, 2016

Houston American Energy Corp. reports financial results for the quarter ended September 30, 2016.

We analyze the earnings along side the following peers of Houston American Energy Corp. – Harvest Natural Resources, Inc., Newfield Exploration Company, Occidental Petroleum Corporation, EOG Resources, Inc., Denbury Resources Inc., Anadarko Petroleum Corporation and Apache Corporation (HNR-US, NFX-US, OXY-US, EOG-US, DNR-US, APC-US and APA-US) that have also reported for this period.


  • Summary numbers: Revenues of USD 0.04 million, Net Earnings of USD -0.37 million.
  • Gross margins widened from -62.61% to -21.10% compared to the same period last year, operating (EBITDA) margins now -872.72% from -258.49%.
  • Year-on-year change in operating cash flow of -5.00% is about the same as the change in earnings, likely no significant movement in accruals or reserves.
  • Earnings rose compared to same period last year, despite decline in operating and pretax margins.

The table below shows the preliminary results and recent trends for key metrics such as revenues and net income growth:

2015-09-30 2015-12-31 2016-03-31 2016-06-30 2016-09-30
Relevant Numbers (Quarterly)
Revenues (mil) 0.12 0.09 0.05 0.03 0.04
Revenue Growth (%YOY) 119.08 -33.25 -52.67 -70.31 -68.07
Earnings (mil) -0.46 -1.83 -0.34 -0.49 -0.37
Earnings Growth (%YOY) 9.4 30.31 71.4 -39.4 20.11
Net Margin (%) -372.5 -2056.12 -703.38 -1447.18 -931.96
EPS -0.01 -0.04 -0.01 -0.01 -0.01
Return on Equity (%) -24.54 -113.94 -25.66 -40.34 -33.31
Return on Assets (%) -24.06 -112.42 -25.36 -39.85 -32.93

Access our Ratings and Scores for Houston American Energy Corp.

Market Share Versus Profits

Revenues History
Earnings History

HUSA-US‘s change in revenue this period compared to the same period last year of -68.07% is almost the same as its change in earnings, and is about average among the announced results thus far in its peer group, suggesting that HUSA-US is holding onto its market share. Also, for comparison purposes, revenues changed by 17.27% and earnings by 24.48% compared to the immediate last period.

Revenues Growth Versus Earnings Growth

Quadrant label definitions. Hover to know more

Leader, Earnings Focus, Laggard, Revenues Focus

Earnings Growth Analysis

The company’s earnings growth has been influenced by the year-on-year improvement in gross margins from -62.61% to -21.10%. However the company’s overhead costs have prevented it from fully capitalizing on these gross margin improvements. In fact, the company’s operating margins (EBITDA margins) showed no improvement over the same period last year.

Gross Margin Versus EBITDA Margin

Quadrant label definitions. Hover to know more

Differentiated; Low Cost, Commodity; Low Cost, Commodity; High Cost, Differentiated; High Cost

Gross Margin Trend

Companies sometimes sacrifice improvements in revenues and margins in order to extend friendlier terms to customers and vendors. Capital Cube probes for such activity by comparing the changes in gross margins with any changes in working capital. If the gross margins improved without a worsening of working capital, it is possible that the company’s performance is a result of truly delivering in the marketplace and not simply an accounting prop-up using the balance sheet.

Gross Margin History
Working Capital Days History

HUSA-US‘s gross margin improvement has not produced any big difference in its working capital. Working capital days are currently 3,015.61, compared to last year’s level of 2,194.47 days. This leads Capital Cube to conclude that the improvements in gross margins are likely from operating decisions and not trade-offs with the balance sheet.

Gross Margin Versus Working Capital Days

Quadrant label definitions. Hover to know more

Customer Financed, Cash Starved, Supplier Financed, Cash Rich

Cash Versus Earnings – Sustainable Performance?

HUSA-US‘s change in operating cash flow of -5.00% compared to the same period last year is about the same as its change in earnings this period. Additionally, this change in operating cash flow is about average among its peer group. This suggests that the company did not use accruals or reserves to manage earnings this period, and that, all else being equal, the earnings number is sustainable.

Operating Cash Flow Growth Versus Earnings Growth

Quadrant label definitions. Hover to know more

Cash Flow based Earnings, Likely Non-cash Earnings, Low Cash Flow Base, Likely Undeclared Earnings


Despite a decline in operating (EBIT) margins as well as a decline in pretax margins, the company’s earnings rose.

EBIT Margin Versus PreTax Margin

Quadrant label definitions. Hover to know more

Operation driven Earnings, One-time Favorables, Low Earnings Base, One-time Unfavorables
EBIT Margin History
PreTax Margin History

Access our Ratings and Scores for Houston American Energy Corp.

Company Profile

Houston American Energy Corp. engages in the exploration and production of oil and gas. It develops, explores, exploits, acquires, and produces natural gas and crude oil properties. The company was founded on April 2, 2001 and is headquartered in Houston, TX.

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