Is Baytex Energy a Cheap Buy?

Baytex Energy Corp (TSX:BTE)(NYSE:BTE) is trading near its 52-week low as the stock has plummeted 40% in value so far this year. It’s merely been a continuation of a much larger sell-off of the stock with Baytex losing close to 90% of its value over the past five years.

Its dividends have been cut long ago and investors have suffered losses ever since the downturn in the oil and gas industry began more than five years ago.

While there have been bumps along the way, the downtrend has been significant. It leads to an important question: is there any reason investors should consider investing in the stock?

The optimist would say that Baytex has posted a profit in each of the past three quarters and revenue has been steady at over $420 million during that time. The company has also generated strong free cash flow of $182 million over the past four quarters as well.

For as bad as a performance as the stock has been on, you wouldn’t know it by looking at the company’s financial results.

Unfortunately, this is par for the course in the industry where strong results are just not enough to get investors buying shares of oil and gas stocks, especially those that are based in Canada.

With a lot of uncertainty in the industry and the Canadian government not making things easy for oil and gas companies with pipelines failing to get approved, it’s not hard to see why investors have been hesitant to invest.

And that’s why despite its strong results, investors may want to keep far away from Baytex until there’s reason to be more hopeful about the long-term prospects of the Canadian oil and gas industry.