Baytex Energy Corp. (BTE) offers investors solid growth and strong income.
Based on consensus estimates, analysts expect 17% EPS growth this year and 8% growth next year. On top of this, the company pays a dividend that yields a juicy 4.6%.
Estimates have been rising after the company delivered better than expected results for the third quarter. It is a Zacks #1 Rank (Strong Buy) stock.
Company Description
Baytex Energy Corp. is a conventional oil and gas company engaged in the acquisition, development and production of oil and natural gas in Western Canada and North Dakota.
It is headquartered in Calgary, Alberta, Canada and has a market cap of $6.7 billion.
Third Quarter Results
Baytex reported better than expected results for the third quarter of 2011 on November 15. Earnings per share came in at 43 cents, beating the Zacks Consensus Estimate of 33 cents.
Funds from operation per share, which adds back certain non cash charges like depreciation, increased 27% year-over-year to $1.22.
Petroleum and natural gas sales rose 32% over the same period to $313.8 million. This was driven in large part by record quarterly production of 52,625 barrels of oil equivalent per day, up 17% year-over-year.
Growth & Income
Analysts raised their estimates for both 2011 and 2012 following the company’s strong third quarter. This sent the stock to a Zacks #1 Rank (Strong Buy).
The Zacks Consensus Estimate for 2011 is now $1.84, representing 17% growth over 2010 EPS. The 2012 consensus estimate is currently $1.98, corresponding with 8% growth.
On top of strong earnings growth, the company pays a monthly dividend that yields a stellar 4.6%.
Shares of BTE have risen more than 40% since October 3, and valuations have risen along with it. The stock’s enterprise value to EBITDA multiple of 12x is above its historical median of 8.2x.
And its price to sales ratio of 6.9 is also a premium to its historical median of 4.4.
But as long as the global economy manages to avoid a significant slowdown and oil prices move higher, expect the company’s strong financial results – and rising stock price – to continue.
Todd Bunton is the Growth & Income Stock Strategist for Zacks Investment Research and Co-Editor of the Reitmeister Value Investor.
