Wednesday, November 30, 2016

Crescent Point Energy Corp

Sound bite for Twitter and StockTwits is: Cheap and risky. Dividends stocks hit their low point after a dividend cut. The dividend cut on this stock happened a while ago and the stock is currently recovering somewhat. So the time to get the cheapest price is when a dividend cut is announced. 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 stock has been cutting it dividends since 2015 after keeping the dividend flat for 5 years. Dividends since 2015 are down by 87%. The latest dividend cut was in 2016 and it was for 70%. It is not surprising as this stock is into oil and gas exploration. Earnings for 2015 were negative and they are expected to remain negative this year and next year.

Shares have increased a lot over the past 5 and 10 years. Outstanding shares are up by 13.6% and 44.2% per year over the past 5 and 10 years. This means that when looking at this stock, it is the per share values that would point to any growth. You can really see this when looking at Revenue, where Revenue growth is 12.8% and 27.3% per year over the past 5 and 10 years. Revenue per Share has declined by 0.7% and 0.8% per year over the past 5 and 10 years. They really are not currently growing where Revenue is concerned.

One of the analysts from Stock Chase pointed out that people bought this stock for the dividends. Others have said this too. However, I do not think that it is wise to count on dividends from an oil and gas producer. These companies go through boom and bust all the time. They tend to have busts in the bad times and that may be the times when dividend investors can least afford a big cuts to dividends.

However, when dividends are good you can benefit. On this stock if you bought it 5, 10 or 15 years ago dividends would have covered your original price if you paid a median price by 25.89%, 124.39% and 972.95%. However, past performance does not necessarily show what the future performance will be. This stock also used to be an income trust stock.

The 15 year low, median and high median Price/Earnings per Share Ratios are 12.11, 14.97 and 16.74. This might be useful in the future when they are again earning money. However, you cannot really test stock price using P/E Ratios as 2016 and 2017 EPS are expected to be negative and 2018 earnings will be low.

I get a Graham Price of $11.77 after doing some fudging because of lack of earnings in 2016. The low, median and high median Price/Graham Price Ratios are 1.50, 1.82 and 2.25. These are rather high. However, the current P/GP Ratio is currently at 1.35 based on a stock price of $15.90. This stock price testing suggests that the stock price is relatively cheap.

The 10 year median Price/Book Value per Share Ratio is 1.68. The current P/B Ratio is 0.85 a values some 495 lower. The current P/B Ratio is based on BVPS of $18.64 and a stock price of $15.90. This stock price testing suggests that the stock price is relatively cheap.

The 10 year median P/S Ratio is 4.20. The current P/S Ratio is 3.38 based on 2016 Revenue estimate of $2549M with Revenue per Share of $4.71 and a current stock price of $15.90. The current P/S Ratio is 19.6% lower than the 10 year median ratio. This stock price testing suggests that the stock price is relatively cheap. (Really to be cheap, the current ratio needs to be 20% lower, but it is very close.)

When I look at analysts' recommendations, I find Strong Buy, Buy and Hold recommendations. The most recommendation is a Buy recommendation and the consensus recommendation is a Buy. The 12 month stock price consensus is $23.22. This implies a total return of 48.30% with 46.04% from capital gains and 2.26% from dividends based on a current stock price of $15.90.

Alexander John Tun of Motley Fool thinks that this company is trading at a price too hard to ignore. He believes that it is also trading relatively lower than similar stock. Geoffrey Morgan in the Financial Post says that the company's losses in the third quarter have narrowed because of technological improvements. Analysts have different views of this stock at Stock Chase.

I will have only one entry for this stock this year. However, I did a more complete report on this company in 2015 and you can see that report hereand here.

The last stock I wrote about was about was Innergex Renewable Energy (TSX-INE, OTC-INGXF)... learn more . The next stock I will write about will be Finning International Inc. (TSX-FTT, OTC-FINGF)... learn more on Friday, December 2, 2016 around 5 pm. Tomorrow on my other blog I will write about Debt Ratios... learn more on Thursday, December 1, 2016 around 5 pm.

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.

See my website for stocks followed and investment notes. I have three blogs. The first talks only about specific stocks and is called Investment Talk. The second one contains information on mostly investing and is called Investing Economics Mostly. My last blog is for my book reviews and it is called Non-Fiction Mostly. Follow me on Twitter or StockTwits.

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