Wednesday, December 3, 2014

Crescent Point Energy Corp.

On my other blog I am today writing about possible cheap dividend stocks for December 2014 continue...

I do not own this stock of Crescent Point Energy Corp. (TSX-CPG, OTC-CSCTF). I got this idea to look into this stock from another blogger, My Own Advisor and his November 2012 blog entry on great Canadian dividend paying stocks. I also noticed that several people at the Toronto Money Show of 2013 mentioned this stock.

This is another old income trust company. They have not raised their dividends since they changed to a corporation in 2009. They can cover their dividends with cash flow, but not with earnings. The 5 year median Dividend Payout Ratio for EPS is 484% and for CFPS is 66%. The DPR for 2013 for EPS was at 746% and the CFPS was at 54%.

The company did raise dividends while it was an income trust. I do not see it raising dividends anytime soon, but they are probably not going to cut them either. There does not seem to be any analysts saying dividends will but cut. An article at Motley Fool addresses this question.

Their final remarks in the Motley Fool article is: "While it is likely that the company will continue to pay dividends for the foreseeable future, the uncertainty created by the sensitivity of the cash flow and profit to volatile and unpredictable oil prices makes this investment unsuitable for income seeking investors."

The outstanding shares have increased a lot over the past 5 and 10 years. Outstanding shares are up 26% and 34% per year over the past 5 and 10 years. Shares have increased due to DRIPs, Stock Options and Share Issues. There has been a lot of issuance of shares. This makes the per share valuations quite important.

Revenues and cash flow has been growing but over the past 5 years growth in per share values has not been good. Net Income has grown over the past 10 years, but not over the past 5 years. There has been no growth in EPS over the past 5 and 10 years.

Revenue is up by 24% and 47% per year over the past 5 and 10 years. Revenue per share is down by 1.6% and up by 9.8% per year over the past 5 and 10 years. Cash Flow has grown by 28% and 49% per year over the past 5 and 10 years, but CFPS is only up by 1.8% and 11.6% per year over the past 5 and 10 years.

Net Income is down by 21% and up by 32% per year over the past 5 and 10 years. EPS is down by 2.8% and by 37% per year over the past 5 and 10 years. Analysts expect EPS to be at $1.22, an increase of 230% over the $0.37 made in 2012. Certainly, the EPS has been growing this year and the EPS over the 12 month period to September 2014 is $0.90, an increase of 137% over EPS for 2013.

Shareholders have done well over the past 5 and 10 years with total returns at 20.24% and 24.23% per year over these periods. The capital gain portion of this total return was at 10.62% and 11.66% per year. The dividend portion of this total return was at 9.62% and 12.57% per year.

The Return on Equity has been very poor over the past 5 years, with the highest at 3.4% in 2011. The ROE for 2013 was just 1.7%. The ROE on comprehensive income was a bit higher at 2.8%.

The Liquidity is low at just 0.38 for 2013. It has always been low as it has a 5 year median of 0.47. When this ratio is below 1.00 it means that the current assets cannot cover the current liabilities. If you add in cash flow after dividends, this ratio rises to 1.26, still a rather low ratio, but a better one. This means that the company needs cash flow to cover current liabilities. This is a place where this stock is vulnerable.

The Debt Ratio is strong at 3.0. This ratio has always been good and the 5 year median value is 3.36. The Leverage and Debt/Equity Ratios are good also with values of 1.50 and 0.50, respectively.

Sound bit for Twitter and StockTwits is: Dividend paying oil company. Certainly the dividend is very good at 9.30%. However, you got to wonder about it safety because of the falling oil prices. It is hard to know what the future holds for oil prices. Certainly, they are not going up in the near future. I depend on dividend income, so I would not be buying this stock at present. See my spreadsheet at cpg.htm.

This is the first of two parts. The second part will be posted on Thursday, December 4, 2014 and will be available here. The first part talks about the stock and the second part talks about the stock price. Hopefully I will post tomorrow. I am having some problems with my computer and might have to take it into a repair shop.

Crescent Point Energy Corp. is a Canada-based oil and gas exploration, development and production company. The Company is a conventional oil and gas producer with assets focused in properties consisting of assets light and medium oil and natural gas reserves in Western Canada and the United States. Its web site is here Crescent Point 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 research for my own edification and I am willing to share. I write what I think and I may or may not be correct.

See my website for stocks followed and investment notes. Follow me on Twitter or StockTwits.

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