Why Epsilon Energy (EPSN) is Igniting This Week: A Gusher of Good News?

The markets are like a rollercoaster right now, but one stock that’s hitting all the right notes is Epsilon Energy Ltd. (NASDAQ: EPSN). This week, the company’s shares have surged, and I’m here to break down why investors are scrambling to get in on this energy play. Buckle up—it’s time to dig into the data and see if this is a fleeting spark or a sustained flame.

The Technicals: A "Wide and Strong Rising Trend"

Let’s start with the charts because, as I always say, “The tape doesn’t lie.” On April 24, EPSN closed at $7.09, up 1.29% on strong volume of 110,500 shares—a sign of institutional buying.

The stock has broken above resistance at $7.10 and is now sitting in a “wide and strong rising trend,” according to analysts. Support levels at $6.67 and $6.81 (where the 200-day moving average sits) act as a safety net. With a 10.5% 3-month forecast, EPSN could hit $8.34 by late July, based on current momentum.

Earnings Revisions: A Gusher of Good News

This isn’t just about price action. The real kicker here is the earnings revisions. Analysts at Roth Capital just hiked their Q1 2025 EPS estimate to $0.14, up from $0.08—a 75% jump in expectations. That’s a stark contrast to Q1 2024, when EPSN missed estimates with $0.04 vs. the $0.05 consensus.

But the real fireworks are in the full-year forecast: The 2025 EPS estimate is now $0.48, a 259.82% surge from 2024. That’s not a typo—that’s more than double the S&P 500’s projected 8.32% growth. If these numbers hold, this stock is a growth machine.

The Dividend Play: Cash Flow or Caution?

EPSN also paid a $0.063/share dividend on April 13, part of its quarterly “eligible dividend” policy. The annualized payout is $0.25, which at first glance looks solid. But dig deeper: The dividend payout ratio is 250%, meaning EPSN is paying out more than twice its earnings in dividends.

Now, this is a red flag for some—but here’s why I’m not hitting the panic button yet. The dividend is funded by operational cash flow (revenue in Q1 2024 was $8.94M, crushing estimates of $7.2M). Plus, with $43.68M in 2025 revenue projections (up 38.6% from 2024), the company has the runway to grow earnings and sustain dividends.

Institutional Backing: The Smart Money is In

Institutional investors are piling in. Funds like Mcintyre Freedman & Flynn and Bridgeway Capital now own 60.33% of EPSN’s shares, with some positions up 22.6% in the past year. This isn’t a fly-by-night investment—these are big players who do their homework.

The Risks: Oil Prices and Volatility

No investment is without risk. EPSN’s operations in the Marcellus Shale, Permian Basin, and Anadarko Basin mean it’s tied to oil prices. If crude crashes, so could this stock. Also, the high dividend payout ratio could strain cash reserves if earnings stumble.

The Bottom Line: Buy the Dip, But Watch the Stops

So, should you buy? Absolutely, but with discipline.

• Buy Below $7.10: That’s the current resistance level. If it holds, go all in.
• Set a Stop-Loss at $6.81: Below this, the upward trend breaks.
• Target $8.34 by July: That’s the 3-month forecast—get ready for fireworks if earnings hit those revised numbers.

The P/E ratio of 24.76 isn’t cheap, but with 259.82% earnings growth projected, this stock could be a value play in disguise. The dividend, while high, is supported by cash flow—and let’s not forget: $0.25 annual dividends with a $7 stock price is a 3.57% yield, which isn’t shabby in this market.

Final Takeaway: A Stock to Watch (and Hold)

Epsilon Energy isn’t just a flash in the pan. With technical buy signals, soaring earnings estimates, and institutional backing, this is a stock to own for the next quarter—and beyond. Just keep an eye on oil prices and that dividend ratio.

Action Alert: Buy dips below $7.10, set stops at $6.81, and hold onto your hats. This could be the energy stock to watch in 2025.

Data as of April 25, 2025. Past performance does not guarantee future results. Consult your financial advisor before making investment decisions.