Cenovus Energy Inc

I do not own this stock 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 in 2009. This was the oil part of EnCana and EnCana now is just a gas play. My spreadsheet reflects this split.

I have dividend data going back to 1992, but note that this company split from EnCana in 2009. Dividends on this stock have gone up and down. This has happen even since 2009. Despite the dividend ups and downs, the 5 and 10 year growth in dividends are 18% and 19% per year. The most recent dividend increase is 10% in 2013.

The total return to the end of 2012 over the past 5 and 10 years is at 2.93% and 13.32 per year with 0.32% and 10.92% per year from capital gains and 2.62% and 2.40% per year from dividends. The total return to date for the past 5 and 10 years is 4.98% and 12.28% per year with 1.98% and 9.36% per year from capital gains and with 3% and 2.92% from dividends.

The current dividend yield is 3.17% which is a little higher than shareholders got over the past 5 and 10 years in dividends per year. The Dividend Payout Ratios are 61% for earnings and 20% for cash flow. The DPR for 2012 and 2013 are similar. However, the DPRs are the higher than they used to be in the past. The higher DPRs started in 2009. This is the same year that the split from EnCana occurred.

The outstanding shares have not changed that much over the past 5 and 10 years with no change over the past 5 years and a decrease in outstanding shares over the past 10 years of 2.3% per year. Shares have changed because of Stock Options, Share Issues and Buy Backs.

The growth in Revenue per Share using 5 year running average over the past 5 and 10 years show growth of 17% and 13% per year. The growth in revenue per Share since 2009 is running at 11% per year. So growth has been good. Analysts expect Revenue to growth around 4% in 2013 and growth in Revenue per Share over the past 12 month to September 30, 2013 is at 4.6%.

The growth in EPS has not been as good. Using the 5 year running averages, I get 5 and 10 year growth at 0% and 10% per year. Growth since 2009 is at 6.3% per year. Analysts have expected growth in earnings for 2013 to be around 30%, but 12 month growth in earnings to the end of Quarter 3 is negative and it is down almost 40%.

Growth in Cash Flow per Share over the past 5 and 10 years, using 5 year running average is at 4.2% and 8% per year, respectively. Since 2009, there has been no growth in Cash Flow per Share and CFPS is down by 2.3% per year. Analysts expected CFPS to be up by around 3.6% in 2013, but to the end of Quarter 3 over the past 12 months, CFPS is down by 3%.

So we have good growth in Revenues, and not bad growth in Cash Flow, but Earnings are not keeping up. Since 2009 Revenue growth is good and Earnings growth is fairly good, but there is no growth in Cash Flow.

Return on Equity has been fairly good over the past 3 years. The 5 year median ROE to the end of 2012 was at 10.1%. The 5 year median ROE on comprehensive income to the end of 2012 is a bit lower at 9.9%. This does not quite break into 10% level, which is where you want it. If you look at ROE for the 12 months to the end of Quarter 3, you get one of only 6%. However, the ROE for comprehensive income to the end of the third quarter is a bit better at 6.9%. However, 6.95 ROE is still not a very good ROE number.

The Liquidity Ratios have always been rather low, but above 1.00 over the past 5 years. The current Liquidity Ratio 1.34. If you add in cash flow after dividends, this ratio is around to 2.00. The Debt Ratio has generally been quite good and the current one is 1.69. The current Leverage and Debt/Equity Ratios are ok for an oil producing company at 2.44 and 1.44.

As with other oil and gas producing companies, it has not done much lately, especially in regards to stock price. Our oil prices are below North American prices and world prices. This was one of things that speakers at the recent Toronto Money Show talked about. However, this will not last forever.

I think a dividend over 3% is a good one. However, dividends paid could vary in the future. It also remains to be seen how this company will change from the original EnCana stock. See my spreadsheet at cve.htm.

This is the first of two parts. Second part will be posted on Friday, November 22, 2013 and will be available here.

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.

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.