Athabasca Oil (TSX:ATH): Assessing Valuation Following Q3 Results, 2025 Outlook, and Buyback Update

Athabasca Oil (TSX:ATH) delivered a batch of updates, including its third quarter earnings, a production outlook for 2025, and news on its ongoing share buyback. Investors are watching these signals closely for future direction.

See our latest analysis for Athabasca Oil.

Athabasca Oil’s steady third quarter results and robust production outlook have helped fuel momentum in the stock, with a 25% share price return over the last 90 days and a total shareholder return of 34% for the year. The strong long-term picture stands out even more, as the company’s five-year total shareholder return sits above 5,000%. This suggests that investor confidence in Athabasca’s ability to deliver value has grown through operational milestones such as its recent buyback and output guidance.

If the recent surge in energy stocks has you curious about where the next opportunity could be, this is an ideal time to broaden your perspective and check out fast growing stocks with high insider ownership

But with shares already up sharply this year and much of the good news already out, investors have to ask: is Athabasca Oil still undervalued, or has the market already priced in next year’s growth potential?

Price-to-Earnings of 7.5x: Is it justified?

Athabasca Oil is currently trading at a price-to-earnings (P/E) ratio of 7.5x, indicating the market is valuing its shares below the peer average and industry benchmarks. With the last closing price at CA$7.08, this valuation points toward a market discount compared to similar companies.

The price-to-earnings ratio compares the company’s share price to its earnings per share and is one of the most widely used tools for assessing valuation, especially in the oil and gas sector. A lower P/E can indicate the market has subdued expectations for future growth or sees higher risk. It can also suggest potential upside if fundamentals are strong.

Compared to its direct peers with an average P/E of 23.1x, and the Canadian oil and gas industry average of 12.2x, Athabasca Oil’s multiple stands out as attractive. This figure is also below the estimated “fair” price-to-earnings ratio of 8.2x, highlighting a potential undervaluation that the market may address if company performances remain steady or improve.

Explore the SWS fair ratio for Athabasca Oil

Result: Price-to-Earnings of 7.5x (UNDERVALUED)

However, revenue growth remains modest, and net income has declined this year. Both of these factors could limit further upside if broader trends do not improve.

Find out about the key risks to this Athabasca Oil narrative.

Another View: What Does Our DCF Model Say?

If we look beyond price-to-earnings and use our SWS DCF model, the story gets interesting. The DCF suggests Athabasca Oil could be significantly undervalued, with the current price sitting well below our calculated fair value. This gap may invite investors to challenge their assumptions about the company's future. However, is this valuation too optimistic given industry trends?

Look into how the SWS DCF model arrives at its fair value.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Athabasca Oil for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover 850 undervalued stocks based on their cash flows. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Build Your Own Athabasca Oil Narrative

If you want to dig deeper or take a different approach to the data, you can shape your own perspective with just a few clicks, and Do it your way.

A great starting point for your Athabasca Oil research is our analysis highlighting 3 key rewards and 2 important warning signs that could impact your investment decision.

Looking for More Investment Ideas?

Stay one step ahead by tapping into new opportunities where others might not look. Open up your strategy with investment ideas built for tomorrow.

• Uncover explosive trends by starting with these 26 AI penny stocks to see which innovators are driving the next phase in artificial intelligence.
• Capture cash flow with confidence as you pursue strong returns in these 20 dividend stocks with yields > 3%; yields stand out even in volatile markets.
• Spot future blue chips early by checking out these 3607 penny stocks with strong financials, which offer strong financials and potential to surprise on the upside.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com