May 31, 2022
[4 min Read]
You are probably aware that Houston American Energy Corp. (AMEX: HUSA) is a leader in the Oil & Gas E&P space. In this analysis, we are going to look at some of the key financial ratios for Houston American Energy Corp. to determine a price prediction for HUSA. Remember these price predictions take into account several assumptions (which I will highlight) to determine a future price. I'll share my HUSA stock price prediction, then show you the approach and assumptions used to calculate the HUSA stock forecast.
Before we go any further, let me start by saying this, stock forecasting is hard. I don't know what the future will hold, and neither do Wall Street Analysts. If they could accurately predict the future, they would be able to beat the S&P 500 and I would be extremely wealthy. What I can say is that we can use available data to determine a reasonable HUSA stock forecast and helps us make better investment decisions, so hopefully, you find this analysis useful.
The Houston American Energy Corp. stock price prediction of $8 was derived from 3 main sources of data. I'll dive into the approach to show you how I determined how I “predicted” a stock price of $8 for HUSA
The Financial growth Metrics provide an analytics valuation approach to determining a reasonable HUSA stock forecast. The other two sources of data will be used to adjust the stock price prediction for HUSA. Let's be honest, if you've ever done a valuation exercise on a stock or tried to determine the future price, it is both an art and a science.
For this part of the analysis, I am looking at the history of key financial metrics for Houston American Energy Corp. to forecast the stock into 2022 and 2025. Most investors know that historical performance does guarantee future performance, but it is useful to see how HUSA has been trending.
HUSA has experienced a 3 Year Earnings Growth Per Share of 48.15%. Let's assume that HUSA can continue to grow Revenue and Earnings at a similar rate for the next three years, then we can assume the HUSA stock forecast for 2025 will follow a similar growth trajectory. I recognize there are a lot of other factors but this is a straightforward and solid approach.
With HUSA Earnings Per Share of -0.1 projected out at the 3 year growth rate gives us a future EPS of 0.2 If the current HUSA Price to Earnings Ratio is -39, (we assume this moves into the positive direction then we determine the HUSA stock forecast by multiple the P/E by the EPS to give us a stock price prediction of $8 per share
There are other ways to predict the price for HUSA but I would argue that P/E, EPS, and Earnings Growth are the most commonly used financial metrics by analysts and investors. This is why I used them to forecast HUSA's stock price.
Analyst Ratings have provided relatively strong indicators of future price movement, which is why they are used to determine a HUSA stock forecast. It can also help you determine if you should buy or sell HUSA There are a total of 2 analyst ratings for HUSA. Here is the current breakdown of analyst ratings:
This breakdown of ratings indicates that Wall Street analysts are overall (Bullish/Bearish) on Houston American Energy Corp.. I factored this into the HUSA stock price forecast by using it as direction guidance for the future. If you were to make investment decisions based on just analyst ratings, this would indicate HUSA is a buy.
HUSA's current P/E Ratio is -39.06 and has an ROE of -0.09. I would consider these poor P/E and ROE for Houston American Energy Corp.These ratios in isolation provide some insights, but it is better to understand them in content for both HUSA and the sector. Utradea provides a PE, ROE, and DCF rating for stocks ranked between 1 (very poor) and 5 (very strong). Without having to go through the calculations, this provides me with a reasonable view of if these key metrics for Houston American Energy Corp. are good or bad from an investment perspective. Here is a breakdown of the ratings
A DCF rating of 5 - Very Strong
A PE rating of 1 - Very Weak
An ROE rating of 3 - Neutral
Based on the actual PE and ROE, along with the metric ratings, I would say that the HUSA forecast is reasonable.
Should you buy HUSA? Well, based on the HUSA stock forecast of XX per share, the underlying analysis, and the current price of HUSA, I would agree with the analysts and say HUSA is a buy. Let me know what you think, happy to dive into other aspects of HUSA to help you make an informed investment decision.