Gran Tierra Energy: $6 Energy Concern Crushes Expectations

| About: Gran Tierra (GTE)
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I last wrote about Gran Tierra Energy (NYSEMKT:GTE) in November when it was trading at $5 a share. The fast growing E&P concerned just moved above the $6 level on back of a stellar earnings report and record production. GTE looks like it could head much higher based on its valuation and growth prospects.

Key highlights from GTE's earnings report:

  • Earnings came in at 20 cents a share, four cents above estimates.
  • Revenue for the quarter was $205mm versus the ~$180mm consensus
  • The company achieved record production of 23,000 BOE/D (Barrels of oil equivalent) during the quarter due to new production coming on line in Peru.

Gran Tierra Energy is an independent energy company with oil and gas properties in Colombia, Argentina, Peru, and Brazil.

5 additional reasons GTE is heading higher from $6 a share:

  1. This is the third straight substantial quarterly earnings beat for the company. Based on these results, I would look for consensus earnings estimates for FY2013 and FY2014 to be taken up over the next few weeks. This should buoy the stock.
  2. Before these results, revenue was expected to grow more than 25% in FY2013 and the stock sports a five year projected PEG of under 1 (.95).
  3. The company has more than $200mm in net cash on its balance sheet (~15% of market capitalization).
  4. Despite projected revenue growth, the stock is selling at under 10x 2014's projected earnings.
  5. The mean price target of the 12 analysts that cover the shares is $8.50 a share, substantially above its current stock price.

Disclosure: I am long GTE. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.