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Gulfport Energy Stock Is a Strong Buy Fueled by Natural Gas Momentum
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Natural gas has been on a notable uptrend, catalyzed by frigid temperatures that have driven heating demand across the United States. This momentum has propelled shares of gas-focused companies like Gulfport Energy (GPOR - Free Report) , which has gained 30% over the past three months. Gulfport has outperformed its peers such as Coterra Energy (CTRA - Free Report) and Range Resources (RRC - Free Report) , showcasing its strong position in the market.
GPOR, CTRA, RRC 3-Month Stock Performance
Image Source: Zacks Investment Research
About Gulfport Energy
Gulfport Energy is a natural gas-focused exploration and production company headquartered in Oklahoma City, OK. Operating primarily in the Utica Shale in Ohio and the SCOOP play in Oklahoma, Gulfport has emerged from bankruptcy with a stronger balance sheet and a free cash flow-oriented strategy. Of its total production, more than 90% comprises natural gas.
Natural gas prices have surged some 70% since mid-October, briefly surpassing the $4 mark last week. This dramatic rise was fueled by a confluence of factors, positioning natural gas producers like Gulfport Energy to capitalize on the rally. The company stands to benefit significantly as the commodity gains momentum in a tightening market.
Strength in GPOR’s Financial Metrics
Robust Earnings Growth & Attractive Valuation: Gulfport Energy is set to deliver an impressive financial performance, with the Zacks Consensus Estimate for 2024 and 2025 EPS reflecting year-over-year growth of 108.5% and 51%, respectively. This growth outlook is supported by disciplined capital allocation and operational efficiencies. Moreover, Gulfport’s stock is attractively valued, trading at a forward price/earnings ratio of 8.49. This is well below the Zacks Oil and Gas - Exploration & Production - U.S. industry. The company has a Value Score of A.
Image Source: Zacks Investment Research
Find the latest EPS estimates and surprises on Zacks Earnings Calendar.
Strong Free Cash Flow and Shareholder Returns: Gulfport delivered $73 million in adjusted free cash flow during Q3 2024, exceeding expectations. The board expanded the stock repurchase authorization by 54%, raising it to $1 billion. As of late October, Gulfport had repurchased 5.2 million shares, lowering its share count by 18%. These actions reflect a commitment to returning value to shareholders while maintaining a robust financial position.
Gulfport’s Operational Efficiencies and Strategic Focus
Efficient Cost Management Supports Margin Growth: Gulfport Energy’s focus on cost efficiency has been a significant driver of its financial health and margin improvements. During 2024, the company achieved over $25 million in capital savings on drilling and completion activities, with two-thirds of these savings attributed to operational efficiencies and cycle-time reductions. This strategic approach has allowed Gulfport to lower its 2024 capital expenditure guidance by approximately 4%, targeting a range of $325-$335 million.
Liquids Production Boost: Gulfport’s focus on liquids-weighted assets further strengthens its profitability. With over 60% of 2025 turn-in-line wells expected to produce liquids, the company is well-positioned to benefit from higher-margin production streams.
Strategic Reserves and Geographic Positioning: Operating in resource-rich regions like Ohio’s Utica play and Oklahoma’s SCOOP formation, Gulfport holds 4.2 trillion cubic feet equivalent of proved reserves. This reserve base supports long-term production stability, enabling the company to capitalize on favorable market conditions.
Image Source: Gulfport Energy Corporation
Mitigating GPOR’s Risks
While Gulfport's reliance on natural gas prices introduces volatility, the company has effectively hedged 65% of its 2024 production at $3.63/MMBtu. This strategy provides short-term stability, though it may limit upside during bullish price scenarios. Additionally, regional pricing constraints and lower spot prices in Appalachia could compress margins.
Conclusion: Gulfport is a Strong Buy
Gulfport Energy stands out as a compelling investment opportunity in the natural gas sector. Its robust free cash flow, disciplined cost management, and focused strategy create a strong foundation for growth. With natural gas demand expected to remain elevated in the near term, Gulfport is well-positioned to deliver significant returns. The stock’s current undervaluation and promising EPS growth reinforce its status as a Zacks Rank #1 (Strong Buy).
Image: Bigstock
Gulfport Energy Stock Is a Strong Buy Fueled by Natural Gas Momentum
Natural gas has been on a notable uptrend, catalyzed by frigid temperatures that have driven heating demand across the United States. This momentum has propelled shares of gas-focused companies like Gulfport Energy (GPOR - Free Report) , which has gained 30% over the past three months. Gulfport has outperformed its peers such as Coterra Energy (CTRA - Free Report) and Range Resources (RRC - Free Report) , showcasing its strong position in the market.
GPOR, CTRA, RRC 3-Month Stock Performance
Image Source: Zacks Investment Research
About Gulfport Energy
Gulfport Energy is a natural gas-focused exploration and production company headquartered in Oklahoma City, OK. Operating primarily in the Utica Shale in Ohio and the SCOOP play in Oklahoma, Gulfport has emerged from bankruptcy with a stronger balance sheet and a free cash flow-oriented strategy. Of its total production, more than 90% comprises natural gas.
Natural gas prices have surged some 70% since mid-October, briefly surpassing the $4 mark last week. This dramatic rise was fueled by a confluence of factors, positioning natural gas producers like Gulfport Energy to capitalize on the rally. The company stands to benefit significantly as the commodity gains momentum in a tightening market.
Strength in GPOR’s Financial Metrics
Robust Earnings Growth & Attractive Valuation: Gulfport Energy is set to deliver an impressive financial performance, with the Zacks Consensus Estimate for 2024 and 2025 EPS reflecting year-over-year growth of 108.5% and 51%, respectively. This growth outlook is supported by disciplined capital allocation and operational efficiencies. Moreover, Gulfport’s stock is attractively valued, trading at a forward price/earnings ratio of 8.49. This is well below the Zacks Oil and Gas - Exploration & Production - U.S. industry. The company has a Value Score of A.
Image Source: Zacks Investment Research
Find the latest EPS estimates and surprises on Zacks Earnings Calendar.
Strong Free Cash Flow and Shareholder Returns: Gulfport delivered $73 million in adjusted free cash flow during Q3 2024, exceeding expectations. The board expanded the stock repurchase authorization by 54%, raising it to $1 billion. As of late October, Gulfport had repurchased 5.2 million shares, lowering its share count by 18%. These actions reflect a commitment to returning value to shareholders while maintaining a robust financial position.
Gulfport’s Operational Efficiencies and Strategic Focus
Efficient Cost Management Supports Margin Growth: Gulfport Energy’s focus on cost efficiency has been a significant driver of its financial health and margin improvements. During 2024, the company achieved over $25 million in capital savings on drilling and completion activities, with two-thirds of these savings attributed to operational efficiencies and cycle-time reductions. This strategic approach has allowed Gulfport to lower its 2024 capital expenditure guidance by approximately 4%, targeting a range of $325-$335 million.
Liquids Production Boost: Gulfport’s focus on liquids-weighted assets further strengthens its profitability. With over 60% of 2025 turn-in-line wells expected to produce liquids, the company is well-positioned to benefit from higher-margin production streams.
Strategic Reserves and Geographic Positioning: Operating in resource-rich regions like Ohio’s Utica play and Oklahoma’s SCOOP formation, Gulfport holds 4.2 trillion cubic feet equivalent of proved reserves. This reserve base supports long-term production stability, enabling the company to capitalize on favorable market conditions.
Image Source: Gulfport Energy Corporation
Mitigating GPOR’s Risks
While Gulfport's reliance on natural gas prices introduces volatility, the company has effectively hedged 65% of its 2024 production at $3.63/MMBtu. This strategy provides short-term stability, though it may limit upside during bullish price scenarios. Additionally, regional pricing constraints and lower spot prices in Appalachia could compress margins.
Conclusion: Gulfport is a Strong Buy
Gulfport Energy stands out as a compelling investment opportunity in the natural gas sector. Its robust free cash flow, disciplined cost management, and focused strategy create a strong foundation for growth. With natural gas demand expected to remain elevated in the near term, Gulfport is well-positioned to deliver significant returns. The stock’s current undervaluation and promising EPS growth reinforce its status as a Zacks Rank #1 (Strong Buy).
You can see the complete list of today’s Zacks #1 Rank stocks here.