Baytex Power (TSX:BTE) is up 50% prior to now few months. Traders who missed the bounce off the spring tariff rout are questioning if BTE inventory continues to be undervalued and good to purchase as an vitality decide for a self-directed Tax-Free Financial savings Account (TFSA) or Registered Retirement Financial savings Plan (RRSP).
Baytex Power share worth
Baytex trades above $3 per share on the time of writing in comparison with $2 throughout the April plunge. Lengthy-term followers of BTE know that the share worth can go on some wild rides in each instructions.
Again in June 2014, Batyex traded round $48 per share. The corporate had simply concluded its US$2.8 billion buy of Aurora Oil and Gasoline, giving Baytex strategic property within the Eagle Ford shale play in Texas. West Texas Intermediate (WTI) oil traded round US$100 per barrel on the time. Baytex anticipated robust income and money circulate progress from the deal and raised the dividend by 9% to an annualized payout of $2.88 per share.
Sadly, Saudi Arabia flooded the market with provide within the following months in a bid to squeeze out the American shale producers. The value of oil plunged, and by the top of 2014, Baytex needed to dramatically reduce its dividend to protect money circulate to cowl curiosity bills on its massive debt place taken on to shut the Aurora deal.
Issues steadily worsened for Baytex shareholders within the following years. The board ultimately shelved the dividend and introduced in new administration to proper the ship. Non-core asset gross sales helped chip away on the debt place and Baytex was capable of maintain on to its greatest property. The pandemic, nonetheless, led to extra ache. On the lows of the crash, Baytex traded for lower than $0.40 per share.
Rock-bottom rates of interest and a surge in oil costs helped the vitality sector rebound strongly in 2021 and the primary half of 2022. BTE reinstated dividend funds on the leap in money circulate.
The inventory soared as excessive as $9 per share by June 2022 when WTI traded above US$120 per barrel. Administration shifted again into acquisition mode, buying Ranger Oil, one other Eagle Ford participant, for US$2.5 billion in 2023. The deal loaded up the steadiness sheet as soon as once more with debt. Since then, oil has largely been on a downward pattern, and Baytex’s share worth has adopted it decrease.
Earnings
Baytex generated web revenue of $152 million, or $020 per share in Q2 2025. That is up from $104 million or $0.13 per share for a similar interval final yr. Within the first half of 2025, Baytex generated $221 million in web revenue in comparison with $90 million within the first six months of 2024.
Administration is concentrated on debt discount and is doing job of chipping away on the debt place. Internet debt on the finish of Q2 2025 was $2.3 billion in comparison with $2.6 billion on the identical time final yr.
Baytex expects to generate $400 million in free money circulate in 2025. Administration plans to use 100% of free money circulate after dividend funds to cut back debt. Internet debt on the finish of 2025 is anticipated to be about $2 billion. Baytex’s present market capitalization is about $2.4 billion.
On the time of writing, the dividend yield is 2.9%.
Oil market outlook
Analysts broadly anticipate oil costs to face headwinds into 2026. OPEC is planning to extend provide to attempt to recapture misplaced market share. On the identical time, non-OPEC producers, together with Canada and america, are setting manufacturing information. Demand might weaken if the U.S. slides right into a recession and China’s financial challenges worsen.
Time to purchase?
Baytex tends to be a unstable inventory, and nimble merchants could make good cash. The present outlook for oil costs, nonetheless, isn’t nice over the close to time period. As such, buy-and-hold buyers may wish to take into account different alternatives within the sector which might be extra steady and provide larger dividend yields.
