Does Whitecap Resources Inc. Belong on Top of Your Long-Term Buy List?

Whitecap Resources Inc. (TSX:WCP) released fourth-quarter earnings on March 17, and its stock has risen over 4% since. Should you be a long-term buyer today?

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Whitecap Resources Inc. (TSX:WCP), one of the largest producers of crude oil and natural gas in Canada, announced fourth-quarter earnings results after the market closed on March 17, and its stock has responded by rising over 4% in the trading sessions since. Let’s take a closer look at the quarterly results to determine if we should consider initiating long-term positions today, or if we should wait for a better entry point in the days ahead.

Breaking down the strong fourth-quarter results

In the fourth quarter of fiscal 2014, Whitecap Resources reported a net profit of $166.12 million, or $0.65 per diluted share, compared to a net loss of $1.47 million, or $0.01 per diluted share, in the same quarter a year ago, as its petroleum and natural gas sales increased 62.5% to $194.99 million. These very strong results can be attributed to the company’s total production increasing 70.7% to a record 37,661 barrels of oil equivalents per day, which more than offset the negative impact of lower commodity prices.

Here’s a quick breakdown of 12 other notable statistics and updates from the report compared to the year-ago period:

  1. Production of crude oil increased 96.7% to 24,752 barrels per day
  2. Production of natural gas liquids increased 38% to 2,979 barrels per day
  3. Production of natural gas increased 35.7% to 59.58 million cubic feet per day
  4. Average realized price of crude oil decreased 11% to $72.45 per barrel
  5. Average realized price of natural gas liquids decreased 36.3% to $34.17 per barrel
  6. Average realized price of natural gas increased 1.3% to $3.77 per thousand cubic feet
  7. Funds from operations increased 108.7% to $139.09 million
  8. Funds from operations increased 38.5% to $0.54 per diluted share
  9. Cash flow from operating activities increased 98.7% to $157.54 million
  10. Development capital expenditures increased 119% to $48.14 million
  11. Paid out dividends totaling $47.53 million during the quarter, compared to dividends totaling $26.85 million in the year-ago period
  12. Net debt increased 99% to $798.29 million

Should you buy shares of Whitecap Resources today?

Even after the post-earnings pop in Whitecap’s stock, I think it represents an attractive long-term investment opportunity, because it still trades at very low valuations and because it has a very high dividend yield.

First, Whitecap’s stock trades at a mere 7.2 times fiscal 2014’s diluted earnings per share of $1.94, which is extremely inexpensive compared to its five-year average price-to-earnings multiple of 29.3.

Second, the company pays a monthly dividend of $0.0625 per share, or $0.75 annually, which gives its stock a 5.4% yield at current levels. I think this makes it qualify as both a value and dividend play today.

Foolish investors should take a closer look and consider establishing positions.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Joseph Solitro has no position in any stocks mentioned.

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