Friday, October 7, 2011

Cenovus Energy Inc.

I do not own this stock (TSX-CVE). This stock has had a long and varied history. Basically the Alberta Energy Company Ltd. (AEC) and PanCanadian Energy Corporation (PanCanadian) companies merged to form EnCana in 2001. EnCana split into EnCana and Cenovus in 2009. My spreadsheet is following this company from AEC to EnCana to Cenovus. Because of this, it may not capture what this company can or will do.

As far as the dividend are concerned there has been a rapid rise. However, in the past companies, the yield was very low, mostly less than 1%. The current dividend yield on this stock is at 2.42%, which is a decent one. At the end of 2010, the Dividend Payout Ratios were fine at 61% for earnings and 23% for cash flow. They are expected to be even lower in 2011 at 44% for earnings and 19% for cash flow. This is good sign for the dividends under this company.

If you had come into this company from AEC, you would have made money over the past 5 and 10 years. Your total return would have been around 6% and 13%, per year, respectively. The portion attributable to dividends would be around 2% per year. This is a respectable performance.

For this company, revenue and book value has gone up over the past 5 and 10 years. However, earnings and cash flow would have fluctuated. Fluctuating earnings and cash flow is rather typical for companies into oil and gas. The growth in book value for the last 5 and 10 years would be 4.5% and 6% per year, respectively.

The debt ratios on this company are fine. The current Liquidity Ratio is a bit low at 1.18. The current Asset/Liability Ratio is quite good at 1.79. The Leverage Ratio and the Debt/Equity Ratio are both fine, with current ones at 2.27 and 1.27, respectively.

The Return on Equity for the end of 2010 is at 9.9% a little low, but fine. It is the same as the 5 year median ROE of 9.9%. The ROE is has slightly higher in the past.

On Tuesday, I look at what the analysts say about this stock and also what my spreadsheet says about the current price.

Cenovus Energy Inc. is an integrated oil company. The Company's operations include enhanced oil recovery (EOR) properties and established crude oil and natural gas production in Alberta and
Saskatchewan. It also has ownership interests in two refineries in Illinois and Texas, United States. Its web site is here Cenovus. See my spreadsheet at cve.htm.

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. See my website for stocks followed and investment notes. Follow me on twitter.

1 comment:

  1. Nice article Susan, and fantastic analysis.

    I'm looking forward to part 2 of the Cenovus series.

    I bought a position in this stock within my holding company earlier this past summer. I like what I see and it will be a long-term position.

    Before investing, I noticed several 0il & Gas related funds has had Cenovus listed among their top 10 holdings. It wasn't my rationale for investing in it, I just found it interesting to see that the company appears to on the radar quite more in recent months.

    Good stuff and have a great weekend!