Sound bite for Twitter and StockTwits is: Dividend Paying Energy. Results of stock price testing is that the stock price is probably relative reasonable and maybe cheap. Debt Ratios are fine. The Dividend Payout Ratios (DPR) are currently good. The current dividend yield is moderate with dividend growth current good. See my spreadsheet on Ovintiv Inc.
Is it a good company at a reasonable price? Personally, I tend not to be much into resources. They are generally less than 2% of my portfolio. I do not see resources as a long term investment. I do have a bit of Barrick Gold Corp and Canadian Natural Resources to keep an eye on this sector as it is a big part of the TSX. Analysts seem to think the stock is current a Buy. My testing is showing the stock price as reasonable.
I do not own this stock of Ovintiv Inc (TSX-OVV, NYSE-OVV). I have owned this stock before as Alberta Energy Co. This company split into two companies in the later part of 2009 - Encana Corporation and Cenovus Energy Inc. On January 27, 2020, this company has changed its name from Encana Corp (TSX-ECA, OTC-ECA) to Ovintiv Inc (TSX-OVV, OTC-OVV).
When I was updating my spreadsheet, I noticed that the dividends have varied a lot over time. In the last 10 years the dividends have gone from a high of $1.40 to a low of $0.30 and are currently at $1.20 US$ in 2024. The stock price has gone from a high of $95.90 to a low of $18.29 with a current price of $58.16 for year-end value in CDN$. Over the past 10 year the stock return is a 3.69% loss, but over the last 5 years, this stock has produced a 9.90% profit.
In the chart below, I am showing 5 and 10 year total growth and per year growth in columns 3 and 4. Column 5 shows growth expected over 12 months to the first quarter in 2024 and expected growth over this year. It is interesting that over the past 12 months and over the next year most of my growth items are to go down.
| Yr | Item | Tot. Gwth | Per Year | Gwth | Coverage |
|---|---|---|---|---|---|
| 5 | Revenue Growth US$ | 83.25% | 12.88% | -3.93% | <-12 mths |
| 5 | AEPS Growth | 59.53% | 9.79% | -26.97% | <-12 mths |
| 5 | Net Income Growth | 95.04% | 14.29% | -6.95% | <-12 mths |
| 5 | Cash Flow Growth | 81.17% | 12.62% | -5.28% | <-12 mths |
| 5 | Dividend Growth | 283.33% | 30.83% | 4.35% | <-12 mths |
| 5 | Stock Price Growth | 51.97% | 8.73% | -8.54% | <-12 mths |
| 10 | Revenue Growth US$ | 85.46% | 6.37% | -15.28% | <-this year |
| 10 | AEPS Growth | 25.87% | 2.33% | -26.97% | <-this year |
| 10 | Net Income Growth | 783.47% | 24.34% | -6.08% | <-this year |
| 10 | Cash Flow Growth | 82.04% | 6.17% | -0.01% | <-this year |
| 10 | Dividend Growth | -65.67% | -10.14% | 4.43% | <-this year |
| 10 | Stock Price Growth | -51.34% | -6.95% | 25.71% | <-this year |
If you had invested in this company in December 2013, for $1,054.90 you would have bought 11 shares at $95.90 per share. In December 2023, after 10 years you would have received $139.48 in dividends. The stock would be worth $639.76. Your total return would have been $779.24. This would be a total loss of 3.69% per year with 4.88% from capital loss and 1.19% from dividends.
| Cost | Tot. Cost | Shares | Years | Dividends | Stock Val | Tot Ret |
|---|---|---|---|---|---|---|
| $95.90 | $1,054.90 | 11 | 11 | $139.48 | $639.76 | $779.24 |
The current dividend yield is moderate with dividend growth current good. The current dividend yield is moderate (2% to 4% ranges) at 2.78%. The 5, 10 and historical median dividend yields are low (below 2%) at 1.96%, 1.61% and 1.96%. The dividend growth over the past 5 years is 30.83% per year. The last dividend increase was in 2023 and it was for 20%. However, dividend payments have varied greatly over time.
The Dividend Payout Ratios (DPR) are currently good. The DPR for 2023 for Earnings per Share (EPS) is good at 15% with 5 year coverage to high at 70%. The DPR for 2023 for Adjusted Earnings per Share (AEPS) is good at 17% with 5 year coverage at 32%. The DPR for 2023 for Cash Flow per Share (CFPS) is good at 7% with 5 year coverage at 5%. The DPR for 2023 for Free Cash Flow (FCF) is good at 28% with 5 year coverage at 18%.
| Item | Cur | 5 Years |
|---|---|---|
| EPS | 14.56% | 70.15% |
| AEPS | 16.76% | 31.77% |
| CFPS | 7.45% | 5.49% |
| FCF | 28.17% | 16.71% |
Debt Ratios are fine. The Long Term Debt/Market Cap Ratio for 2023 is good at 0.44 and currently at 0.40. The Liquidity Ratio for 2023 is too low at 0.60 and at 0.44 currently. If you added in Cash Flow after dividends, the ratios are fine at 1.96 and currently at 1.63. The Debt Ratio for 2023 is good at 2.08 and 2.09 currently. The Leverage and Debt/Equity Ratios for 2023 are good at 1.93and 0.93 and currently at 1.92 and 0.92.
| Type | Year End | Ratio Curr |
|---|---|---|
| Lg Term R | 0.44 | 0.40 |
| Intang/GW | 0.21 | 0.21 |
| Liquidity | 0.60 | 0.44 |
| Liq. + CF | 1.96 | 1.63 |
| Debt Ratio | 2.08 | 2.09 |
| Leverage | 1.93 | 1.92 |
| D/E Ratio | 0.93 | 0.92 |
The Total Return per year is shown below for years of 5 to 31 to the end of 2023 in CDN$. Under the Capital Gain column is the portion of the Total Return attributable to capital gains. Under the Dividend column is the portion of the Total Return attributable to dividends. See chart below.
| From | Years | Div. Gth | Tot Ret | Cap Gain | Div. |
|---|---|---|---|---|---|
| 2018 | 5 | 30.02% | 9.90% | 8.10% | 1.80% |
| 2013 | 10 | -8.16% | -3.69% | -4.88% | 1.19% |
| 2008 | 15 | -7.69% | -4.16% | -5.99% | 1.82% |
| 2003 | 20 | 4.21% | 2.58% | -0.64% | 3.23% |
| 1998 | 25 | 6.05% | 7.00% | 2.84% | 4.16% |
| 1993 | 30 | 5.49% | 8.69% | 4.35% | 4.34% |
| 1992 | 31 | 5.30% | 9.05% | 4.65% | 4.41% |
The Total Return per year is shown below for years of 5 to 21 to the end of 2023 in US$. Under the Capital Gain column is the portion of the Total Return attributable to capital gains. Under the Dividend column is the portion of the Total Return attributable to dividends. See chart below.
| From | Years | Div. Gth | Tot Ret | Cap Gain | Div. |
|---|---|---|---|---|---|
| 2018 | 5 | 30.83% | 10.57% | 8.73% | 1.84% |
| 2013 | 10 | -10.14% | -5.87% | -6.95% | 1.08% |
| 2008 | 15 | -8.16% | -4.41% | -6.47% | 2.06% |
| 2003 | 20 | 4.09% | 2.85% | -0.91% | 3.76% |
| 2001 | 21 | 6.70% | 5.53% | 1.07% | 4.46% |
The 5-year low, median, and high median Price/Earnings per Share Ratios are 2.98, 5.12 and 6.68. The corresponding 10 year ratios are 2.76, 4.45 and 5.85. The corresponding historical ratios are 6.47, 7.90 and 9.84. The current P/E Ratio is 7.32 based on a stock price of $55.60 and EPS estimate for 2024 of $7.60. the current ratio is above high ratios for the 10 year median ratios. This stock price testing suggests that the stock price is relatively expensive. This testing is in CDN$.
I also have Adjusted Earnings per Share (AEPS) data. The 5-year low, median, and high median Price/Adjusted Earnings per Share Ratios are 5.13, 7.09, and 9.05. The corresponding 10 year ratios are 5.92, 9.99 and 14.05. The current ratio is 8.02 based on a stock price of $40.17 and AEPS estimate for 2024 of $8.02. The current ratio is between the low and median ratios of the 10 year median ratios. This stock price testing suggests that the stock price is relatively reasonable and below the median. This testing is in U$ and you will get a similar result in CDN$.
I get a Graham Price of $88.43. The 10-year low, median, and high median Price/Graham Price Ratios are 0.46, 0.81 and 1.13. The current P/GP Ratio is 0.63 based on a stock price of $55.60. The current ratio is between the low and median ratios of the 10 year median ratios. This stock price testing suggests that the stock price is relatively reasonable and below the median. This testing is in CDN$.
I get a 10-year median Price/Book Value per Share Ratio of 1.29. The current P/B Ratio is 1.10 based on a Book Value of $10,328M, Book Value per Share of $36.64 and a stock price of $40.17. The current ratio is 15% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable and below the median. This testing is in US$, but you will get a similar result in CDN$.
I get a 10-year median Price/Cash Flow per Share Ratio of 2.87. The current P/CF Ratio is 2.72 based on a stock price of $40.17, Cash Flow per Share estimate for 2024 of $14.78 and Cash Flow of $4,167M. The current ratio is 5% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable and below the median. This testing is in US$, but you will get a similar result in CDN$.
I get an historical median dividend yield of 1.96%. The current dividend yield is 2.99% based on dividends of $1.20 and a stock price of $40.17. The current dividend yield is 52% above the historical median dividend yield. This stock price testing suggests that the stock price is relatively cheap. This testing is in US$, but you will get a similar result in CDN$.
I get a 10 year median dividend yield of 1.61%. The current dividend yield is 2.99% based on dividends of $1.20 and a stock price of $40.17. The current dividend yield is 85% above the 10 year median dividend yield. This stock price testing suggests that the stock price is relatively cheap. This testing is in US$, but you will get a similar result in CDN$.
The 10-year median Price/Sales (Revenue) Ratio is 1.33. The current P/S Ratio is 1.23 based on Revenue estimate for 2024 of $9,220M, Revenue per Share of $32.71 and a stock price of $40.17. The current ratio is 8% below the current ratio. This stock price testing suggests that the stock price is relatively reasonable and below the median. This testing is in US$, but you will get a similar result in CDN$.
Results of stock price testing is that the stock price is probably relative reasonable and maybe cheap. The dividend yield testing is saying that the stock price is relatively cheap. However, the P/S Ratio test does not confirm this and says that the stock price is relatively reasonable. Most of the rest of the testing is pointing to a stock price that is relatively reasonable.
When I look at analysts’ recommendations, I find Strong Buy (12), Buy (5), Hold (8). The consensus would be a Buy. The 12 month stock price consensus is $75.97 ($55.21 US$), with a high of $93.57 ($68.00 US$) and low of $57.80 ($42.00 US$). The consensus stock price of $75.97 implies a total return of 39.61% with 36.64% from capital gains and 2.97% from dividends based on a current stock price of $55.60.
There are a couple of Buy recommendations on Stock Chase for this stock. A couple of analysts says it is not their favourite in energy. Stock Chase gives this stock 4 stars out 5. Aditya Raghunath on Motley Fool thought this was a good energy stock to buy in March 2024. Adam Othman on Motley Fool thought this was a good energy stock to buy in April 2024. Travis Hoium on Motley Fool talks about why energy stocks jumped in October 2024. The company put out a Press Release about their fourth quarter of 2023. The company put out a Press Release about their second quarter of 2024.
Simply Wall Street via Yahoo Finance reviews this stock. Simply Wall Street gives this stock 3 and one half stars out of 5. Simply Wall Street has 4 warnings out on this stock of earnings are forecast to decline by an average of 3.1% per year for the next 3 years; has a high level of debt; unstable dividend track record; and profit margins (18.8%) are lower than last year (28.4%).
Ovintiv is a North American oil and natural gas exploration and production company. It focuses on the exploration and development of oil, NGLs, and natural gas reserves. The company has three segments: USA Operations, Canadian Operations, and Market Optimization. Its web site is here Ovintiv Inc.
The last stock I wrote about was about was CCL Industries Inc (TSX-CCL.B, OTC-CCDBF) ... learn more. The next stock I will write about will be Dollarama Inc (TSX-DOL, OTC-DLMAF) ... learn more on Wednesday, October 23, 2024 around 5 pm. Tomorrow on my other blog I will write about TD Economist on US Election .... learn more on Tuesday, October 22 around 5 pm.
This blog is meant for educational purposes only and is not to provide investment advice. I am not a licensed professional investment advisor. Before making any investment decision, you should always do your own research or consult an investment professional. I do research for my own edification and I am willing to share. I write what I think and I may or may not be correct.
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