Tuesday, June 3, 2014

Husky Energy Inc. 2

I own this stock of Husky Energy Inc. (TSX-HSE, OTC-HUSKF). I had been tracking this stock prior to buying it. When I bought this stock in 2008, the stock was selling at a reasonable price. This company is into oil and natural gas and they have been making money.

There is not much in the way of insider trading. Insider buying is at $1M and there is no insider selling. Insiders not only have stock options, but also have Performance Share Units and Deferred Share Unit. There is insider ownership with the co-chairman having shares worth around $8.4M, Ka-Shing Li having shares worth around $10.3B (36%) and Hutchison Whampoa Luxembourg Holdings having shares worth around 9.8B (34%).

The 5 year low, median and high median Price/Earnings per Share Ratios are 14.86, 16.54 and 18.22. These are higher than the corresponding 10 year values. The current P/E Ratio is 13.10 based on a stock price of $36.68 and 2014 EPS estimate of $2.80. This stock price test suggests that the stock is currently cheap. However, measured against the 10 year high median P/E Ratio of 14.10, this stock would not come off as cheap.

I get a Graham Price of $36.01. The 10 year low, median and high median Price/Graham Price Ratios are 0.87, 1.10 and 1.30. The current P/GP Ratio is 1.02. This stock price test suggests that the stock price is reasonable.

The 10 year median Price/Book Value per Share ratio is 1.82. The current P/B Ratio is 1.78 a value some 2% lower. The current P/B Ratio is based on a stock price of $36.68 and a current BVPS of $20.59. This stock price test suggests that the stock price is reasonable.

The 5 year median dividend yield is 4.59% and the current dividend yield 3.27% is some 28% lower and suggest that the stock price is expensive. The historical average dividend yield is 4.06% and still is some 19% higher than the current dividend yield. If you look at the median dividend yield it is 3.92% and still some 16.5% higher than the current one. By these stock price tests, the stock price is expensive.

When I look at analysts' recommendations I find Strong Buy, Buy and Hold. The consensus recommendation would be a Buy. The 12 month stock price target is $38.50. This implies a total return of 8.23% with 4.96% from capital gains and 3.27% from dividends. This is not a ringing endorsement for a buy recommendation.

The Motley Fool site has a recent favorable review on this stock. Another article at the Motley Fool site talks about 5 reasons to invest in Husky. A recent article in the Calgary Herald talks about a recent rise in Husky stock.

In looking for other analysis on this stock I came across this site which talks about Husky doing share buybacks. However, I had no record of this so I went back to the statements to look and I could find no mention of share buybacks in the annual statements?

Most tests that I have looked show that the stock price is reasonable to expensive. In looking at technical analysis on Bar Chart short, median and long term indicators generally are a Buy. See my spreadsheet at hse.htm.

This is the second of two parts. The first part was posted on Monday June 2, 2014 and is available here. The first part talks about the stock and the second part talks about the stock price.

This company 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 has operations in Western Canada, Eastern Canada, US, China, Indonesia and Greenland. This company is mostly foreign owned. Industry: Oil and Gas (Integrated Oils). Its web site is here Husky.

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 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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1 comment:

  1. Husky stock price is lower than it should be due to a very weak accounting area. They have an ex drugstore accountant as the controller now. Sad. She is causing havoc in the office and many staff members are simply unhappy and unproductive due to her influence. Now, Husky is sourcing China for integral supplies that are going to cause accidents. the cost of these future occurances is going to be high.