Shareholders of Gulfport Energy would probably like to forget the past six months even happened. The stock has dropped 23.5% and now trades at a new 52-week low of $160.82. This might have investors contemplating their next move.
Given the weaker price action, is now an opportune time to buy GPOR? Find out in our full research report, it’s free.
Why Does GPOR Stock Spark Debate?
With drilling operations focused on the Utica Shale in eastern Ohio and the SCOOP play in central Oklahoma, Gulfport Energy (NYSE: GPOR) drills for and produces natural gas from underground shale formations.
Two Positive Attributes:
1. Long-Term Revenue Growth Shows Strong Momentum
Cyclical sectors like Energy often flatter weaker operators during favorable price environments, but a longer-term lens separates those from businesses that can consistently perform across market cycles. Over the last five years, Gulfport Energy grew its sales at a solid 15.3% compounded annual growth rate. Its growth beat the average energy upstream and integrated energy company and shows its offerings resonate with customers.
2. Elite Gross Margin Powers Best-In-Class Business Model
In any given year, energy gross margins are heavily influenced by prices, hedging, and cost inflation, but over a full cycle these gross margins reveal which producers are structurally advantaged through superior “rock” quality, infrastructure access, and cost position.
Gulfport Energy, which averaged 69.6% gross margin over the last five years, exhibits impressive unit economics in the sector. It means the company will remain profitable at lower commodity prices than peers with inferior gross margins and serves as an excellent starting point for ultimate operating profits and free cash flow generation.
One Reason to Be Careful:
Shrinking EBITDA Margin
Adjusted EBITDA margin is an important measure of profitability for the sector and accounts for the gross margins and operating costs mentioned previously. Unlike operating margin, it is not distorted by accounting conventions around reserves, drilling costs, and assumptions on commodity consumption from the well or basin. Adjusted EBITDA highlights the economic reality of how much cash the rock produces before the capital structure (debt service) and the drilling budget (capex) are considered.
Looking at the trend in its profitability, Gulfport Energy’s EBITDA margin decreased significantly over the last year. This raises questions about the company’s expense base because its revenue growth should have given it leverage on its fixed costs, resulting in better economies of scale and profitability. Its EBITDA margin for the trailing 12 months was 55.6%.
Final Judgment
Gulfport Energy’s positive characteristics outweigh the negatives. After the recent drawdown, the stock trades at 6.1× forward P/E (or $160.82 per share). Is now a good time to initiate a position? See for yourself in our comprehensive research report, it’s free.
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