Husky Energy

This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional.
I do not own any of this stock (TSX-HSE), but I have been tracking it. I am looking at it today as a friend asked me to. This company is into oil and natural gas. They have been making money. They are into energy, after all. After selling SNC yesterday, I am looking for something to buy; this stock currently pays a very nice dividend and has some good characteristics, so I am considering it.

All my following figures are for the five years prior December 2007. Revenues have been increasing nicely on average at 19% and Earnings per Share (EPS) at some 32%. Dividends have been increasing at the rate of 43% yearly, but I note that this company gives out regular and special dividends. I take it that the company divides the dividends in such a manner so that they can cut the dividend if necessary, by only cutting the special dividend and not the regular one. It would look better to investors.

The Current Asset/Debt ratio is only .98, but this is better than normal for this company. The average over the last 10 years is .73. The Asset/Debt ratio is a healthier 2.19. The cash flow from operations has been increasing at a healthy 19% and the operation profit margin for 2007 is 30%. The Return on Equity (ROE) is very good for 2007 at 27% with the 5 year average at 25%.

The only negative notes are the Accrual Ratio is very high at 18% (it is not good if over 5%), the Current Asset/Debt at .93 as noted above, and the Price/Book Value ratio of 3.1. These ratios point to the debt being higher and the price being higher than what you might want in a value stock.

This stock has both value and growth characteristics, with better growth characteristics. This stock is on the Mergent’s Dividend Achiever’s List, but not on the S&P/TSX Canadian Dividend Aristocrats list. This stock is involved in oil and gas, so I do not think you can buy and hold for ever. You need to keep an eye on these energy companies as oil and gas has a history of price fluctuations. I note that a number of people have a buy rating on this stock. It has done better over the last year than the TSX composite Index, but not as well as the Energy Index, that includes this stock.

See my spreadsheet at http://www.spbrunner.com/stocks/hse.htm. See my website at http://www.spbrunner.com/stocks.html.

Husky Energy is one of Canada's largest energy and energy-related companies. The Company's operations include the exploration, development and production of crude oil and natural gas. Husky Energy works in Western Canada, off-shore Eastern Canada and off-shore China and Indonesia so it is an international company. Its web site is www.huskyenergy.ca