📊 EPSN Key Takeaways
Is Epsilon Energy Ltd. (EPSN) a Good Investment?
Epsilon Energy demonstrates strong operational performance with 63.7% revenue growth and excellent 42.2% operating margin, but profitability deteriorates significantly at the net income level, which was flat YoY despite strong top-line growth, raising earnings quality concerns. Tight liquidity (1.08x current ratio, $7.9M cash against $45.5M debt) and unexplained margin compression between operating and net income warrant caution despite outstanding interest coverage.
Epsilon Energy shows solid core financial health, with a debt-free balance sheet, strong liquidity, and operating cash flow that materially exceeds reported net income. However, growth is modest, net margin is thin, and returns on equity and assets remain weak, which limits the strength of the fundamental case despite healthy cash generation.
Epsilon Energy Ltd. Key Strengths (EPSN)
- Revenue growth of 63.7% YoY shows strong market demand and operational traction
- Operating margin of 42.2% indicates efficient core operations and operational leverage
- Free cash flow margin of 39.5% demonstrates cash generation ability from operations
- Exceptional interest coverage ratio of 616.9x shows virtually no financial distress risk from debt obligations
- Moderate leverage with Debt/Equity of 0.37x provides financial flexibility
- Debt-free balance sheet with strong liquidity and minimal financial risk
- High operating cash flow and free cash flow generation relative to revenue
- Healthy operating margin indicates the core business remains profitable at the operating level
EPSN Stock Risks: Epsilon Energy Ltd. Investment Risks
- Net income flat at +0% YoY despite 63.7% revenue growth indicates severe margin compression or non-operating drains on profitability
- Diluted EPS declined 377.8% YoY signaling earnings per share deterioration despite operational growth
- Extremely low returns on equity (0.6%) and assets (0.3%) suggest inefficient capital deployment despite revenue growth
- Tight current ratio of 1.08x combined with only $7.9M cash against $45.5M debt indicates liquidity vulnerability
- Missing capital expenditure data obscures reinvestment requirements and asset maintenance sustainability in capital-intensive oil/gas sector
- Net margin is low, leaving limited cushion against commodity or cost volatility
- ROE and ROA are weak, suggesting inefficient capital utilization
- Revenue growth is modest, raising questions about the durability and scalability of earnings growth
Key Metrics to Watch
- Net income and net margin trajectory to identify if bottom-line deterioration reverses or continues
- Capital expenditure requirements and free cash flow sustainability to assess long-term operational viability
- Cash balance and working capital trends given tight current ratio and commodity price volatility exposure
- Quarterly EPS trend to confirm if -377.8% decline represents accounting anomaly or structural profitability issue
- Net margin and diluted EPS recovery
- Operating cash flow consistency relative to revenue and net income
Epsilon Energy Ltd. (EPSN) Financial Metrics & Key Ratios
💡 AI Analyst Insight
The 39.5% free cash flow margin provides substantial flexibility for dividends, buybacks, and strategic investments.
EPSN Profit Margin, ROE & Profitability Analysis
EPSN vs Energy Sector: How Epsilon Energy Ltd. Compares
How Epsilon Energy Ltd. compares to Energy sector averages
Sector benchmarks are approximate industry averages. Actual sector performance may vary.
Is Epsilon Energy Ltd. Stock Overvalued? EPSN Valuation Analysis 2026
Based on fundamental analysis, Epsilon Energy Ltd. has mixed fundamental signals relative to the Energy sector in 2026.
Note: This is a fundamental analysis based on SEC filings. For P/E ratio, price targets, and market-based valuation, consult financial data providers. This is not investment advice.
Epsilon Energy Ltd. Balance Sheet: EPSN Debt, Cash & Liquidity
EPSN Revenue & Earnings Growth: 5-Year Financial Trend
5-Year Trend Summary: Epsilon Energy Ltd.'s revenue has grown significantly by 22% over the 5-year period, indicating strong business expansion. The most recent EPS of $0.09 reflects profitable operations.
EPSN Revenue Growth, EPS Growth & YoY Performance
EPSN Quarterly Earnings & Performance
| Quarter | Revenue | Net Income | EPS |
|---|---|---|---|
| Q1 2026 | $16.2M | $729.4K | $0.02 |
| Q3 2025 | $7.3M | $366.0K | $0.02 |
| Q2 2025 | $7.3M | $815.7K | $0.04 |
| Q1 2025 | $8.0M | $1.5M | $0.07 |
| Q3 2024 | $6.3M | $366.0K | $0.02 |
| Q2 2024 | $6.5M | $430.6K | $0.02 |
| Q1 2024 | $8.0M | $1.5M | $0.07 |
| Q3 2023 | $6.3M | $388.8K | $0.02 |
Data sourced from SEC EDGAR 10-Q quarterly filings. Figures may represent quarterly or cumulative values.
Epsilon Energy Ltd. Dividends, Buybacks & Capital Allocation
EPSN SEC Filings: Latest 10-K & 10-Q Analysis
Access official SEC EDGAR filings for Epsilon Energy Ltd. (CIK: 0001726126)
📋 Recent SEC Filings
❓ Frequently Asked Questions about EPSN
What is the AI rating for EPSN?
Epsilon Energy Ltd. (EPSN) has a Combined AI Grade of B from Claude (B) and ChatGPT (B) with 70% combined confidence, based on fundamental analysis of SEC EDGAR filings.
What are EPSN's key strengths?
Claude: Revenue growth of 63.7% YoY shows strong market demand and operational traction. Operating margin of 42.2% indicates efficient core operations and operational leverage. ChatGPT: Debt-free balance sheet with strong liquidity and minimal financial risk. High operating cash flow and free cash flow generation relative to revenue.
What are the risks of investing in EPSN?
Claude: Net income flat at +0% YoY despite 63.7% revenue growth indicates severe margin compression or non-operating drains on profitability. Diluted EPS declined 377.8% YoY signaling earnings per share deterioration despite operational growth. ChatGPT: Net margin is low, leaving limited cushion against commodity or cost volatility. ROE and ROA are weak, suggesting inefficient capital utilization.
What is EPSN's revenue and growth?
Epsilon Energy Ltd. reported revenue of $25.6M.
Does EPSN pay dividends?
Epsilon Energy Ltd. does not currently pay dividends.
Where can I find EPSN SEC filings?
Official SEC filings for Epsilon Energy Ltd. (CIK: 0001726126) including 10-K, 10-Q, and 8-K reports are available on SEC EDGAR.
What is EPSN's EPS?
Epsilon Energy Ltd. has a diluted EPS of $0.02.
How is the AI analysis conducted?
Two independent AI systems — Claude (Anthropic) and ChatGPT (OpenAI) — analyze SEC EDGAR filings including 10-K annual reports and 10-Q quarterly reports. Each AI evaluates financial health, profitability ratios, balance sheet strength, and growth metrics. The combined grade reflects both perspectives for balanced insights.
What is EPSN's fundamental grade?
Based on our AI fundamental analysis in June 2026, Epsilon Energy Ltd. has a B grade with 70% confidence. Review the strengths and risks sections above for full context. This is not investment advice.
Is EPSN stock overvalued or undervalued?
Valuation metrics for EPSN: ROE of 0.6% (sector avg: 14%), net margin of 2.8% (sector avg: 12%). Compare these metrics with sector averages to assess valuation.
What is EPSN's AI grade for 2026?
Our dual AI analysis gives Epsilon Energy Ltd. a combined B grade for 2026. Revenue is data pending, with profitability at or below sector average. Always conduct your own research.
What is EPSN's free cash flow?
Epsilon Energy Ltd.'s operating cash flow is $10.1M, with capital expenditures of N/A. FCF margin is 39.5%.
How does EPSN compare to other Energy stocks?
Vs Energy sector averages: Net margin 2.8% (avg: 12%), ROE 0.6% (avg: 14%), current ratio 1.08 (avg: 1.3).