Crescent Point Energy Corp.

Sound bite for Twitter and StockTwits is: Oil and Gas div stock. This would not be a favourite of my for an investment because of the three cautionary notes I have listed. See my spreadsheet on Crescent Point Energy Corp.

I do not own this stock of Crescent Point Energy Corp. (TSX-CPG, NYSE-CPG). 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 company is also an old income trust and it changed to a corporation in 2009. At that time it did not decrease dividends. However, since 2009 dividends or distributions have been flat until this year. In 2015 dividends were decreased by some 57%. This company is an oil and gas producer, so decreasing dividends because of the current economic climate is not a surprise. Even with reduced dividend, the dividend yield is still high at 7%.

Considering the present economic climate for oil and gas, long term investors have done well. The total return for the past 10 years to date is 11.58% per year with dividends at 13.44% per year and capital loss at 1.86% per year. The total return for the last 5 years is a loss of 8.56% per year.

I doubt that distributions or dividend will ever go as high as they were in the past. The company never could cover the dividend with earnings. In terms of cash flow they did better. The Dividend Payout Ratio for CFPS was 52.3% in 2014 and the 5 year median is 62%.

One of the problems with this company is that the shares have grown by 16.4% and 30.6% per year over the past 5 and 10 years. They are using money raised to fund development and capital acquisitions. Not everyone likes this. One speaker at the Money Show called using shares like an ATM machine. The problem is that you have to be careful on how you look the statements for the company and the only values that really count for shareholders is the per share values. So this is a cautionary note on this company.

You can see that starkly in looking at Revenue. Revenue is up by 33.8% and 39.1% per year over the past 5 and 10 years. Revenue per Share is up by 15% and 6.5%. The real growth for shareholders is the Revenue per Share growth. Analysts feel that Revenue will decline by some 28% in 2015. If you compare the 12 month period to the end of 2014 and the 12 month period to the end of the third quarter, Revenue is down by some 28%. However, since shares so far this year have increased by 13%, Revenue per Share is down by some 36% already.

You see the same problems with Cash Flow. The Cash Flow has grown by 28.6% and 42.2% per year over the past 5 and 10 years. CFPS is up by 10.5% and 8.9% per year over the past 5 and 10 years. The CFPS even though they are good figures are a lot lower than Cash Flow. Analysts expect Cash Flow to drop by 17% in 2015. If you compare the 12 month period to the end of 2014 and the 12 month period to the end of the third quarter, Cash Flow is down by some 15%. CFPS will probably be done by 27% for 2015.

In EPS terms, analysts expect earnings losses in 2015 and 2016. There is an earnings loss for the third quarter of 2015.

Return on Equity has fluctuated a lot but has only been over 10% twice in the last 10 years and at no time during the past 5 years. This is another cautionary note on this company. There should have been good years over the past 10 years for them to get a good ROE.

The Liquidity Ratio is 0.87 for 2014. This ratio has a 5 year median of 0.47. When this is below 1.00, it means that current assets cannot cover current liabilities. If you added in cash flow after dividends the ratio becomes 1.99. This is a good ratio, but the 5 year median of 1.22 is low. This is another cautionary note. That is they need current cash flow to cover current liabilities. Any time you have to muck around with a ratio to make it better is certainly a cautionary note.

The Debt Ratio is good and for 2014 it was 2.61. Leverage and Debt/Equity Ratios are also good at 1.62 and 0.62, respectively for 2014.

This is the first of two parts. The second part will be posted on Friday, December 4, 2015 and will be available here. The first part talks about the stock and the second part talks about the stock price.

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. It is involved in acquiring, developing and holding interests in petroleum and natural gas properties and assets through a general partnership and wholly owned subsidiaries. Its web site is here Crescent Point Energy Corp.

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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