Is it a good company at a reasonable price? This is in the oil and gas business and therefore is risky and cyclical. The stock near its recent high, but off the 2024 highs. Dividends have been volatile. Over the past 32 years dividends have gone up 15 times and down 6 times.
I do not own this stock of Cenovus Energy Inc (TSX-CVE, NYSE-CVE). This is another stock that was talked about at the 2010 Money Show in Toronto. There were those who liked oil companies and they mentioned both Suncor Energy Inc. (TSX-SU) and Cenovus Energy Inc. (TSX-CVE). This company was split off from EnCana (TSX-ECA) in 2009. My spreadsheet reflects this split. I was also following Alberta Energy Co. (TSX-AEC) into EnCana.
When I was updating my spreadsheet, I noticed Analysts seem to think that this year will be an ok year, next year that the company will not do as well and then better in 2027. For Revenue they expect it to be 1.8% less in 2025 than in 2024, then 2026 to go down 7% and up 33% in 2027. For EPS they expect it to go up 14% this year, go down 12% next year and then go up 32% in 2027.
Almost all the officers and directors I follow bought more stock during the past year. There is one director I follow that did not. Often directors do not buy shares.
If you had invested in this company in December 2014, for $1,006.74 you would have bought 42 shares at $23.97 per share. In December 2024, after 10 years you would have received $151.99 in dividends. The stock would be worth $915.18. Your total return would have been $1,067.17. This would be a total return of 0.62% per year with 0.95% from capital loss and 1.57% from dividends. The 5 year total return is much better than the 10 year total return. See the chart in a paragraph below.
| Cost | Tot. Cost | Shares | Years | Dividends | Stock Val | Tot Ret |
|---|---|---|---|---|---|---|
| $23.97 | $1,006.74 | 42 | 10 | $151.99 | $915.18 | $1,067.17 |
The current dividend yield is moderate with dividend growth good recently. The current dividend yield is moderate (2% to 4% ranges) at 3.35%. The 5, 10 and historical median dividend yields are low (below 2%) at 1.48%, 1.68% and 1.48%. The dividend increase is good (above 15% per year) over the past 5 years at 26% per year. However, dividends have decrease by 4% per year over the past 10 years because dividends were cut by 70% in 2020.
The Dividend Payout Ratios (DPR) are good. The DPR for 2024 for Earnings per Share (EPS) is good at 49% with 5 year coverage at 37%. The DPR for 2024 for Adjusted Funds from Operations (AFFO) is good at 16% with 5 year coverage at 10%. The DPR for 2024 for Funds from Operations (FFO) is good at 40% with 5 year coverage at 13%. The DPR for 2024 for Cash Flow per Share (CFPS) is good at 16% with 5 year coverage at 11%. The DPR for 2024 for Free Cash Flow (FCF) is good at 36% with 5 year coverage at 21%. FCF varies in 2024 from $2,920M to $4,285M.
| Item | Cur | 5 Years |
|---|---|---|
| EPS | 48.80% | 36.73% |
| AFFO | 15.53% | 10.47% |
| FFO | 40.23% | 13.10% |
| CFPS | 15.53% | 10.62% |
| FCF | 36.20% | 20.71% |
Debt Ratios are good. The Long Term Debt/Market Cap Ratio for 2024 is good at 0.18 and currently at 0.16. The Liquidity Ratio for 2024 is low at 1.42 and 1.32 currently. If you added in Cash Flow after dividends, the ratios are good at 2.50 and currently at 2.22. The Debt Ratio for 2024 is good at 2.11 and 2.11 currently. The Leverage and Debt/Equity Ratios for 2024 are good at 1.90 and 0.90 and currently at 1.90 and 0.90.
| Type | Year End | Ratio Curr |
|---|---|---|
| Lg Term R | 0.18 | 0.16 |
| Intang/GW | 0.07 | 0.07 |
| Liquidity | 1.42 | 1.32 |
| Liq. + CF | 2.50 | 2.22 |
| Debt Ratio | 2.11 | 2.11 |
| Leverage | 1.90 | 1.90 |
| D/E Ratio | 0.90 | 0.90 |
The Total Return per year is shown below for years of 5 to 32 to the end of 2024 in CDN$. 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. |
|---|---|---|---|---|---|
| 2019 | 5 | 26.19% | 12.71% | 10.54% | 2.17% |
| 2014 | 10 | -4.39% | 0.62% | -0.95% | 1.57% |
| 2009 | 15 | -1.08% | 1.40% | -0.96% | 2.36% |
| 2004 | 20 | 9.20% | 4.34% | 1.37% | 2.97% |
| 1999 | 25 | 9.78% | 7.94% | 4.40% | 3.54% |
| 1994 | 30 | 8.09% | 11.10% | 6.89% | 4.21% |
| 1992 | 32 | 8.01% | 10.72% | 6.77% | 3.95% |
The Total Return per year is shown below for years of 5 to 19 to the end of 2024 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. |
|---|---|---|---|---|---|
| 2019 | 5 | 23.63% | 10.52% | 8.34% | 2.18% |
| 2014 | 10 | -6.42% | -1.55% | -3.04% | 1.49% |
| 2009 | 15 | -3.13% | -1.03% | -3.34% | 2.30% |
| 2005 | 19 | 8.23% | 0.80% | -1.93% | 2.73% |
The 5-year low, median, and high median Price/Earnings per Share Ratios are 9.74, 11.71 and 13.69. The corresponding 10 year ratios are 5.36, 7.07 and 8.77. The corresponding historical ratios are 12.04, 14.95 and 16.98. The current P/E Ratio is 12.55 based on a stock price of $23.91 and EPS estimate for 2025 of $1.91. The current ratio is below the low ratio of the 10 year median ratios. This stock price testing suggests that the stock price is relatively expensive.
However, the 10 year median ratios are very low because of a number of earning losses and therefore negative P/E Ratios. The 5 year or historical P/E Ratios might be better to compare the current P/E Ratio to. This current ratio is between the low and high ratios of the 10 year median ratios and gives says that the stock price is relatively reasonable but above the median. The current P/E Ratio is between the low and median ratios of the historical ratios and says that stock price is relatively reasonable and below the median.
I also have Adjusted Funds from Operations (AFFO) data. The 5-year low, median, and high median Price/Adjusted Funds from Operations Ratios are 4.52, 5.43 and 6.35. The corresponding 10 year ratios are 4.55, 5.64 and 7.28. The corresponding historical ratios are 6.03, 6.56 and 7.75. The current P/AFFO Ratio is 5.05 based on a stock price of $23.91 and EPS estimate for 2025 of $4.73. 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.
I also have Funds from Operations (FFO) data. The 5-year low, median, and high median Price/ Funds from Operations Ratios are 4.49, 6.52 and 8.54. The corresponding 10 year ratios are 5.68, 7.55 and 9.65. The corresponding historical ratios are 6.36, 7.27 and 8.54. The current P/FFO Ratio is 7.61 based on a stock price of $23.91 and EPS estimate for 2025 of $3.14. 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.
I get a Graham Price of $26.28. The 10-year low, median, and high median Price/Graham Price Ratios are 0.51, 0.80 and 1.02. The current P/GP Ratio is 0.91 based on a stock price of $23.91. The current ratio is between the median and high ratio of the 10 year median ratios. This stock price testing suggests that the stock price is relatively reasonable but above the median. There are problems with this test because of earnings losses over the past year affect how the Graham Price is calculated.
I get a 10-year median Price/Book Value per Share Ratio of 1.17. The current ratio is 1.48 based on a Book Value of $29,402M, Book Value per Share of $16.11 and a stock price of $23.91. The current ratio is 26% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively expensive. This ratio is a rather normal ratio as good P/B Ratio is considered to be 1.50.
I also have a Book Value per Share estimate for 2025 of $17.05. This implies a ratio of 1.40 with a stock price of $23.91 and Book Value of $31,117M. This ratio is 19% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable but above the median.
I get a 10-year median Price/Cash Flow per Share Ratio of 6.11. The current ratio is 5.57 based on a stock price of $23.91, Book Value per Share estimate for 2025 of $4.29 and Cash Flow of $7,829M. The current ratio is 8.7% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable and below the median.
I get an historical median dividend yield of 1.48%. The current dividend yield is 3.35% based on dividends of $0.80 and a stock price of $23.91. The current dividend yield is 126% above the historical median dividend yield. This stock price t
esting suggests that the stock price is relatively cheap. I get a 10 year median dividend yield of 1.60%. The current dividend yield is 3.35% based on dividends of $0.80 and a stock price of $23.91. The current dividend yield is 110% above the 10 year median dividend yield. This stock price testing suggests that the stock price is relatively cheap.
The 10-year median Price/Sales (Revenue) Ratio is 0.79. The current P/S Ratio is 0.82 based on Revenue estimate for 2025 of $53,318M, Revenue per Share of $29.21 and a stock price of $23.91. The current ratio is 3.9% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable but above the median.
Results of stock price testing is that the stock price is that the stock price is reasonable and may even be cheap. The dividend yield testing is saying that the stock price is cheap. However, the P/S Ratio testing does not confirm this and says it is reasonable, but above the median. This all depends on how much faith you put into the dividend yield tests. I like the dividend yield tests because they do not reply on estimates. A lot of the other testing is saying that the stock price is reasonable and above and below the median.
When I look at analysts’ recommendations, I find Strong Buy (7), Buy (6), Hold (1) and Underperform (1). The consensus is a Strong Buy. The 12 month stock price consensus is $27.77 with a high of $32.00 and low of $21.00. The consensus stock price implies a total return of $19.49% with 16.14% from capital gains and 3.35% from dividends based on a current stock price of $23.91.
There are mixed opinions on this stock at Stock Chase. One analyst reminded us of the past dividend cut, so not a good dividend stock. One analyst does not like Oil Sands companies. Others think it is a good buy. Joey Frenette on Motley Fool thinks it is a red hot energy stock. Amy Legate-Wolfe on Motley Fool talks about them acquiring MEG Energy. The company put out a Press Release about their fourth quarter of 2024. The company put out a Press Release about their second quarterly results for 2025. The company has now put out a Press Release about their third quarterly results for 2025.
Simply Wall Street via Yahoo Finance reviews this stock and provides two valuation methods with one saying it is undervalued and one saying it is fairly valued. Simply Wall Street has two warnings out on this stock of profit margins (5.1%) are lower than last year (8.6%); and unstable dividend track record.
Cenovus Energy Inc is an integrated oil company. The company had upstream projects across Western Canada; crude oil production and natural gas and NGLs production offshore China and Indonesia. The downstream operations include upgrading and refining operations in Canada and the U.S., and commercial fuel operations across Canada. Its web site is here Cenovus Energy Inc.
The last stock I wrote about was about was Keyera Corp (TSX-KEY, OTC-KEYUF) ... learn more. The next stock I will write about will be Quebecor Inc (TSX-QBR.B, OTC-QBCRF) ... learn more on Monday, November 3, 2024 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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