Thursday, November 15, 2012

Cenovus Energy Inc

I do not own this stock of Cenovus Energy Inc. (TSX-CVE, NYSE-CVE). I did own the predecessor company of EnCana. However, when they were going to split EnCana into two companies, I sold my shares. I have very little of this company and did not want to have to deal with two even smaller holdings. I held this company (as Alberta Energy Co) from 2000 to 2000 and then as EnCana from 2006 to 2009. I made a return of 15% per year on these holdings. My first holding gave me an 18% per year return and my second holding gave me a 9.5% per year return.

I sometimes venture into oil and gas companies and they are a large part of the TSX. I like to know what is going on in this sector, but I really do not like investing much in it. Currently I hold some Husky (TSX-HSE) and Canadian Natural Resources Ltd. (TSX-CNQ).

First of all I should say that my spreadsheet follows Alberta Energy Company Ltd. to EnCana to Cenovus. The dividend growth looks really good with growth over the past 5 and 10 years at 31% and 24% per year. However, since the change to Cenovus, there has been one increase of 10% in 2011. Dividends did not increase in 2010 and so far, have not increased in 2012.

The dividend yield is decent at 2.6% and the 5 year median dividend yield is 2.76%. However, prior to 2008 dividends were hovering around 1%, which is a rather low dividend. The 5 year median Dividend Payout Ratio for earnings is quite good at 45%. However, since 2009 DPR for earnings would be closer to 60%. The DPR for cash flow is around 20% after before 2009 and was under 10% prior.

The total return for the last 5 and 10 years was 7.6% and 15.04% per year. The dividend portion was 2.63% and 2.2% per year and the capital gains were 4.97% and 12.84% per year. Dividend made up 35% and 15% of the total return over the past 5 and 10 years.

The change in outstanding shares is down 0.6% per year over the past 5 years and up 4% per year over the past 10 years. Outstanding shares are only up slightly since 2009. Revenue is up 12% and 17% per year over the past 5 and 10 years. Revenue per Share is up 13% and 12% per year over the past 5 and 10 years.

Over the past 5 years, earnings are down 13% per year. Over the past 10 years earnings are up 9% per year. Over the past 5 and 10 years, cash flow is up 5% and 8% per year, respectively. Over the past 5 and 10 years Book Value is 0% and 13% per year.

The current Liquidity Ratio is 1.49, which is just ok and this ratio has been lower as it has a 5 year median value of just1.15. However, this stock has had strong cash flow and including cash flow after dividends, the ratio would be a very good 1.94 for a 5 year median value.

The Debt Ratio has always been quite good and this stock has a current ratio of 1.70. The current Leverage and Debt/Equity Ratios are fine at 2.42 and 1.42.

The Return on Equity for the financial year ending in 2011 was 15.7% and the 5 year median ROE is 15.7%. These are good values. The ROE on comprehensive income is a little higher at 16.2% and this ROE has a 5 year median of 13% because this ROE has been a bit lower than the ROE on net income over the past few years.

Shareholders have done well in this stock. However, note that often dividends on oil and gas companies can fluctuate with the price of oil and gas.

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 or StockTwits.

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