BTE

We rate BAYTEX ENERGY CORP. (BTE) as a Buy with a composite score of 67.7/100 at a current price of $3.77. The stock scores above average across the majority of our six quantitative factors and ranks #164 out of 7,333 stocks in our universe, reflecting a favorable risk-reward profile.

The rating is primarily driven by strength in value (91th percentile) and quality (81th percentile), which together account for the majority of the composite score. Offsetting weakness in stability (37th percentile) and investment (57th percentile) tempers our overall conviction. We assign a Wide Moat rating (71/100), High uncertainty, and Exemplary capital allocation.

Key items to watch: quarterly earnings execution and sector-level competitive dynamics. Any material change in these dynamics could warrant a reassessment of our rating. The moat trend is stable, which suggests the competitive landscape is stable for now.

BAYTEX ENERGY CORP. holds an above-average position (#17 of 50) within the Mining sector, based on our composite quantitative scoring across quality, value, momentum, and stability factors. The composite score of 67.7/100 places it at rank #164 in our full 7,333-stock universe. At $2.1B in market capitalization, BAYTEX ENERGY CORP. is a mid-cap player in the Mining space, which limits certain scale advantages but may allow for more agile strategic execution.

Revenue is growing at 12%, though momentum at the 59th percentile suggests the market has not yet fully recognized this trajectory. This potential disconnect between fundamental improvement and market recognition could represent an opportunity for patient investors if the growth trend persists.

The margin cascade tells an important story: gross margins of 77% (+33.9pp vs sector) narrow to operating margins of 27% (+14.9pp vs sector) and net margins of 8.1%, yielding a gross-to-net conversion rate of 10%. The significant margin erosion from gross to net suggests elevated operating expenses, high interest costs, or other structural drags that warrant monitoring.

At a current price of $3.77, BAYTEX ENERGY CORP. appears undervalued relative to its fundamentals. Our value factor score of 91/100 reflects a composite assessment across multiple valuation metrics including price-to-earnings, price-to-book, EV/EBITDA, and price-to-sales ratios relative to both sector peers and the broader market. The stock screens as attractively priced on a majority of these measures, suggesting the market may be underappreciating the underlying fundamentals.

The stock currently trades at a P/E of 18.5x (a 35% premium to the sector median of 13.7x), EV/EBITDA of 0.8x (discounted to peers), P/B of 1.0x, P/S of 0.4x. The above-sector P/E multiple suggests the market is pricing in superior growth or quality, which our analysis partially supports given strong quality metrics.

We assign a High uncertainty rating to BAYTEX ENERGY CORP.. Key risk factors include elevated market sensitivity (beta of 1.62), below-average price stability (37th percentile). The wide range of potential outcomes widens our fair value estimate and increases the possibility of permanent capital impairment. Investors considering this name should size positions accordingly and demand a meaningful margin of safety before initiating.

Specific risk factors that inform our assessment include: elevated market sensitivity (beta of 1.62); below-average price stability (37th percentile). Each of these factors independently widens the distribution of potential outcomes, and in combination they create a risk profile that demands careful position sizing. The stability factor at the 37th percentile and quality factor at the 81th percentile provide a quantitative summary of the overall risk landscape.

Key risk mitigants include: healthy gross margins of 77% provide a buffer against cost pressures; a 2.76% dividend yield anchors total return. These factors partially offset the identified risks and provide downside protection in adverse scenarios. On balance, the risk-reward profile warrants caution and disciplined position management.

We rate BAYTEX ENERGY CORP.'s capital allocation as Exemplary. Management demonstrates a strong track record of balancing reinvestment with shareholder returns, evidenced by returns on equity of 22.7%, a 2.76% dividend yield. Exemplary allocators typically generate returns on equity above 20% while maintaining debt-to-equity below 50% — BAYTEX ENERGY CORP. meets this high bar.

The balance sheet remains conservatively managed, providing financial flexibility for opportunistic investments while maintaining a margin of safety for shareholders. The company returns capital via a 2.76% dividend yield, and the combination of 12.2% return on assets and controlled leverage suggests management is deploying capital at rates well above the cost of capital — the hallmark of exemplary stewardship.

In summary, BAYTEX ENERGY CORP. receives a Buy rating with a composite score of 67.7/100 (rank #164 of 7,333). Our quantitative framework assigns a Wide Moat (71/100, trend: stable), High uncertainty, and Exemplary capital allocation. The average factor score across quality, value, momentum, stability, and investment is 65/100.

Our analysis supports a constructive view on BAYTEX ENERGY CORP.. The combination of a wide competitive moat, high uncertainty, and exemplary capital allocation creates a risk-reward profile that favors accumulation at current levels. We recommend investors consider adding this name to portfolios aligned with the stock's risk profile.