Is BNK Petroleum Inc (TSE:BKX) An Energy Industry Laggard Or Leader?

BNK Petroleum Inc (TSX:BKX), a CA$107.04M small-cap, is an oil and gas company operating in an industry which has persevered through an extended oil price slump since 2014. However, energy-sector analysts are forecasting for the entire industry, negative growth in the upcoming year . Is the oil and gas industry an attractive sector-play right now? Today, I will analyse the industry outlook, as well as evaluate whether BNK Petroleum is lagging or leading its competitors in the industry. Check out our latest analysis for BNK Petroleum

What’s the catalyst for BNK Petroleum's sector growth?

The oil price collapse drove a negative 40% growth in the energy sector in the past five years. Although profitability is always a key metric, in the oil and gas industry, growth in production and reserves has often been more important. However, recently the sector saw a reversal in the downturn, and in the past year, the industry turnaround delivered growth in the teens, beating the Canadian market growth of 13.27%. BNK Petroleum leads the pack with its impressive earnings growth of 54.93% over the past year. This proven growth may make BNK Petroleum a more expensive stock relative to its peers.

Is BNK Petroleum and the sector relatively cheap?

Oil and gas companies are typically trading at a PE of 14.43x, relatively similar to the rest of the Canadian stock market PE of 16.28x. This illustrates a fairly valued sector relative to the rest of the market, indicating low mispricing opportunities. However, the industry returned a lower 5.96% compared to the market’s 9.22%, illustrative of the recent sector upheaval. Since BNK Petroleum’s earnings doesn’t seem to reflect its true value, its PE ratio isn’t very useful. A loose alternative to gauge BNK Petroleum’s value is to assume the stock should be relatively in-line with its industry.

Next Steps:

BNK Petroleum recently delivered an industry-beating growth rate in earnings, which is a positive for shareholders. If the stock has been on your watchlist for a while, now may be the time to buy, if you like its ability to deliver growth and are not highly concentrated in the energy industry. However, before you make a decision on the stock, I suggest you look at BNK Petroleum's fundamentals in order to build a holistic investment thesis.

• 1. Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
• 2. Historical Track Record: What has BKX's performance been like over the past? Go into more detail in the past track record analysis and take a look at the free visual representations of our analysis for more clarity.
• 3. Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of BNK Petroleum? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!

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Simply Wall St analyst Simply Wall St and Simply Wall St have no position in any of the companies mentioned. This article 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.