Touchstone Exploration (AIM:TXP) - Share price, News & Analysis

Q: What is the Fair Price of TXP when looking at its future cash flows? For this estimate we use a Discounted Cash Flow model.

TXP (£0.96) is trading below our estimate of [[fair value]] (£33.88)

TXP fundamental analysis
Snowflake Score
Valuation	4/6
Future Growth	5/6
Past Performance	4/6
Financial Health	2/6
Dividends	0/6

TXP Stock Overview

Rewards

Trading at 97.2% below our estimate of its fair value

Earnings are forecast to grow 144.19% per year

Earnings grew by 2767.8% over the past year

Risk Analysis

Highly volatile share price over the past 3 months

High level of non-cash earnings

Touchstone Exploration Competitors

Indus Gas

AIM:INDI

UK£461.1m

EnQuest

LSE:ENQ

UK£516.0m

Gulf Keystone Petroleum

LSE:GKP

UK£520.9m

Seplat Energy

LSE:SEPL

UK£709.6m

Price History & Performance

Summary of all time highs, changes and price drops for Touchstone Exploration
Historical stock prices
Current Share Price	CA$0.96
52 Week High	CA$1.61
52 Week Low	CA$0.52
Beta	0.82
1 Month Change	69.91%
3 Month Change	9.71%
1 Year Change	17.07%
3 Year Change	585.71%
5 Year Change	1,013.04%
Change since IPO	1,119.05%

Shareholder Returns

	TXP	GB Oil and Gas	GB Market
7D	10.3%	-0.4%	0.4%
1Y	17.1%	-5.6%	-9.0%

Return vs Industry: TXP exceeded the UK Oil and Gas industry which returned -5.6% over the past year.

Return vs Market: TXP exceeded the UK Market which returned -9% over the past year.

Price Volatility

Is TXP's price volatile compared to industry and market?
TXP volatility
TXP Average Weekly Movement	11.3%
Oil and Gas Industry Average Movement	8.7%
Market Average Movement	5.4%
10% most volatile stocks in GB Market	10.8%
10% least volatile stocks in GB Market	2.7%

Stable Share Price: TXP is more volatile than 90% of UK stocks over the past 3 months, typically moving +/- 11% a week.

Volatility Over Time: TXP's weekly volatility (11%) has been stable over the past year, but is still higher than 75% of UK stocks.

About the Company

Founded	Employees	CEO	Website
2012	95	Paul Baay	https://www.touchstoneexploration.com

Touchstone Exploration Inc., an upstream oil and gas company, engages in the exploration, development, production, and sale of petroleum and natural gas properties in the Republic of Trinidad and Tobago. The company has interests in various private exploration mineral leasing properties; and two exploration blocks. Its primary exploration focus is the Ortoire exploration block.

Touchstone Exploration Fundamentals Summary

How do Touchstone Exploration's earnings and revenue compare to its market cap?
TXP fundamental statistics
Market Cap	US$256.72m
Earnings (TTM)	US$5.97m
Revenue (TTM)	US$25.78m

43.0x

P/E Ratio

10.0x

P/S Ratio

Is TXP overvalued?

See Fair Value and valuation analysis

Earnings & Revenue

Key profitability statistics from the latest earnings report
TXP income statement (TTM)
Revenue	US$25.78m
Cost of Revenue	US$7.71m
Gross Profit	US$18.07m
Other Expenses	US$12.11m
Earnings	US$5.97m

Last Reported Earnings

Jun 30, 2022

Next Earnings Date

n/a

Earnings per share (EPS)	0.028
Gross Margin	70.09%
Net Profit Margin	23.14%
Debt/Equity Ratio	43.9%

How did TXP perform over the long term?

See historical performance and comparison

We’ve recently updated our valuation analysis.

Valuation

Is TXP undervalued compared to its fair value, analyst forecasts and its price relative to the market?

Valuation Score

4/6

Valuation Score 4/6

Price-To-Earnings vs Peers
Price-To-Earnings vs Industry
Price-To-Earnings vs Fair Ratio
Below Fair Value
Significantly Below Fair Value
Analyst Forecast

Key Valuation Metric

Which metric is best to use when looking at relative valuation for TXP?

Other financial metrics that can be useful for relative valuation.

The above table shows the n/a ratio for TXP. This is calculated by dividing TXP's market cap by their current preferred multiple.
What is TXP's n/a Ratio?
n/a Ratio	0x
n/a	n/a
Market Cap	US$256.72m

TXP key valuation metrics and ratios. From Price to Earnings, Price to Sales and Price to Book to Price to Earnings Growth Ratio, Enterprise Value and EBITDA.
Key Statistics
Enterprise Value/Revenue	10.9x
Enterprise Value/EBITDA	30.1x
PEG Ratio	0.3x

Price to Earnings Ratio vs Peers

How does TXP's PE Ratio compare to its peers?

TXP PE Ratio vs Peers

The above table shows the PE ratio for TXP vs its peers. Here we also display the market cap and forecasted growth for additional consideration.
Company	PE	Estimated Growth	Market Cap
Peer Average	8.1x
INDI Indus Gas	22x	n/a	UK£461.1m
ENQ EnQuest	1.6x	-8.2%	UK£516.0m
GKP Gulf Keystone Petroleum	3.7x	-9.1%	UK£520.9m
SEPL Seplat Energy	5x	-3.9%	UK£709.6m
TXP Touchstone Exploration	43x	144.2%	UK£331.1m

Price-To-Earnings vs Peers: TXP is expensive based on its Price-To-Earnings Ratio (43x) compared to the peer average (8.1x).

Price to Earnings Ratio vs Industry

How does TXP's PE Ratio compare vs other companies in the GB Oil and Gas Industry?

Price-To-Earnings vs Industry: TXP is expensive based on its Price-To-Earnings Ratio (43x) compared to the UK Oil and Gas industry average (7.7x)

Price to Earnings Ratio vs Fair Ratio

What is TXP's PE Ratio compared to its Fair PE Ratio? This is the expected PE Ratio taking into account the company's forecast earnings growth, profit margins and other risk factors.

TXP PE Ratio vs Fair Ratio.
Fair Ratio
Current PE Ratio	43x
Fair PE Ratio	82.7x

Price-To-Earnings vs Fair Ratio: TXP is good value based on its Price-To-Earnings Ratio (43x) compared to the estimated Fair Price-To-Earnings Ratio (82.7x).

Share Price vs Fair Value

What is the Fair Price of TXP when looking at its future cash flows? For this estimate we use a Discounted Cash Flow model.

Below Fair Value: TXP (£0.96) is trading below our estimate of fair value (£33.88)

Significantly Below Fair Value: TXP is trading below fair value by more than 20%.

Analyst Price Targets

What is the analyst 12-month forecast and do we have any statistical confidence in the consensus price target?

Analyst Forecast: Target price is more than 20% higher than the current share price and analysts are within a statistically confident range of agreement.

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Future Growth

How is Touchstone Exploration forecast to perform in the next 1 to 3 years based on estimates from 3 analysts?

Future Growth Score

5/6

Future Growth Score 5/6

Earnings vs Savings Rate
Earnings vs Market
High Growth Earnings
Revenue vs Market
High Growth Revenue
Future ROE

144.2%

Forecasted annual earnings growth

Earnings and Revenue Growth Forecasts

Analyst Future Growth Forecasts

Earnings vs Savings Rate: TXP's forecast earnings growth (144.2% per year) is above the savings rate (0.9%).

Earnings vs Market: TXP's earnings (144.2% per year) are forecast to grow faster than the UK market (10% per year).

High Growth Earnings: TXP's earnings are expected to grow significantly over the next 3 years.

Revenue vs Market: TXP's revenue (105% per year) is forecast to grow faster than the UK market (4.4% per year).

High Growth Revenue: TXP's revenue (105% per year) is forecast to grow faster than 20% per year.

Earnings per Share Growth Forecasts

Future Return on Equity

Future ROE: Insufficient data to determine if TXP's Return on Equity is forecast to be high in 3 years time

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Past Performance

How has Touchstone Exploration performed over the past 5 years?

Past Performance Score

4/6

Past Performance Score 4/6

Quality Earnings
Growing Profit Margin
Earnings Trend
Accelerating Growth
Earnings vs Industry
High ROE

16.3%

Historical annual earnings growth

Earnings and Revenue History

Quality Earnings: TXP has a high level of non-cash earnings.

Growing Profit Margin: TXP's current net profit margins (23.1%) are higher than last year (1.3%).

Past Earnings Growth Analysis

Earnings Trend: TXP has become profitable over the past 5 years, growing earnings by 16.3% per year.

Accelerating Growth: TXP's earnings growth over the past year (2767.8%) exceeds its 5-year average (16.3% per year).

Earnings vs Industry: TXP earnings growth over the past year (2767.8%) exceeded the Oil and Gas industry 291.9%.

Return on Equity

High ROE: TXP's Return on Equity (8.7%) is considered low.

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Financial Health

How is Touchstone Exploration's financial position?

Financial Health Score

2/6

Financial Health Score 2/6

Short Term Liabilities
Long Term Liabilities
Debt Level
Reducing Debt
Debt Coverage
Interest Coverage

Financial Position Analysis

Short Term Liabilities: TXP's short term assets ($20.7M) exceed its short term liabilities ($20.4M).

Long Term Liabilities: TXP's short term assets ($20.7M) do not cover its long term liabilities ($53.4M).

Debt to Equity History and Analysis

Debt Level: TXP's net debt to equity ratio (30.1%) is considered satisfactory.

Reducing Debt: TXP's debt to equity ratio has increased from 39.9% to 43.9% over the past 5 years.

Debt Coverage: TXP's debt is not well covered by operating cash flow (18.8%).

Interest Coverage: TXP's interest payments on its debt are not well covered by EBIT (2.8x coverage).

Balance Sheet

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Dividend

What is Touchstone Exploration current dividend yield, its reliability and sustainability?

Dividend Score

0/6

Dividend Score 0/6

Notable Dividend
High Dividend
Stable Dividend
Growing Dividend
Earnings Coverage
Cash Flow Coverage

Dividend Yield vs Market

Notable Dividend: Unable to evaluate TXP's dividend yield against the bottom 25% of dividend payers, as the company has not reported any recent payouts.

High Dividend: Unable to evaluate TXP's dividend yield against the top 25% of dividend payers, as the company has not reported any recent payouts.

Stability and Growth of Payments

Stable Dividend: Insufficient data to determine if TXP's dividends per share have been stable in the past.

Growing Dividend: Insufficient data to determine if TXP's dividend payments have been increasing.

Earnings Payout to Shareholders

Earnings Coverage: Insufficient data to calculate payout ratio to determine if its dividend payments are covered by earnings.

Cash Payout to Shareholders

Cash Flow Coverage: Unable to calculate sustainability of dividends as TXP has not reported any payouts.

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Management

How experienced are the management team and are they aligned to shareholders interests?

8.3yrs

Average management tenure

CEO

Paul Baay (59 yo)

8.25yrs

Tenure

US$816,043

Compensation

Mr. Paul Raymond Baay, B.A., ICD D, has been the Chief Executive Officer of Touchstone Exploration Inc. since 2010 and serves as its President. Mr. Baay serves as an Acting Chief Executive Officer and Chie...

CEO Compensation Analysis

Compensation vs Market: Paul's total compensation ($USD816.04K) is about average for companies of similar size in the UK market ($USD706.77K).

Compensation vs Earnings: Paul's compensation has been consistent with company performance over the past year.

Leadership Team

Experienced Management: TXP's management team is seasoned and experienced (8.3 years average tenure).

Board Members

Experienced Board: TXP's board of directors are considered experienced (5.2 years average tenure).

Ownership

Who are the major shareholders and have insiders been buying or selling?

Insider Trading Volume

Insider Buying: Insufficient data to determine if insiders have bought more shares than they have sold in the past 3 months.

Recent Insider Transactions

Ownership Breakdown

Dilution of Shares: Shareholders have not been meaningfully diluted in the past year.

Data	Last Updated (UTC time)
Company Analysis	2022/08/15 00:00
End of Day Share Price	2022/08/15 00:00
Earnings	2022/06/30
Annual Earnings	2021/12/31