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.
When I was updating my spreadsheet, I noticed that the Liquidity Ratio was below 1.00 and the company depends on cash flow to cover current liabilities. The stock options granted in 2017 increased outstanding shares was by 0.74%. This is rather high. In most companies the increase is at 0.50% or less. Also, there is insider buying.
This company was an income trust between 2003 and 2009. This accounts for the high dividend yield this stock used to have. The historical dividend yield is 8.57%, but the one from 2009 is lower and is 6.96%. Income Trust companies had high yields. The range of yields on this stock ranges from 2.3% to 16.4% which is a big range. The dividend yields are often high with a current yield of 8.26% with 5 and 10 year median yields at 7.23% and 7.09%.
Since this was an income trust company in the past, the only way for the dividends to go was down. The company is also currently having a problem earnings, which have been negative for the past 3 years and is expected not to be positive until next year. They started to cut the dividends in 2015 and dividends are down some 87% since then.
The good news is that dividends are covered by cash flow. The Dividend Payout Ratio for CFPS is 11.6% in 2017 with a 5 year coverage of 43.1%. It is best when this ratio is under 40%, and the DPR for CFPS has been decreasing for a number of years. They cannot cover the dividends by EPS as the EPS has been negative for the past 3 years and is expected to be negative for 2018. However, analysts think that the DPR for EPS would be around 41% in 2019, and decrease from there.
The Long Term Debt/Market Cap Ratio has deteriorated with the falling stock market price for this stock. Long Term Debt was increasing until 2017, but then the ratio as good at 0.77. This ratio has since increased to a very high one of 1.71 because of the stock price drop in 2018 of almost 40%.
The Liquidity Ratios have always been low and the company depends on cash flow to cover current expenses. The Liquidity Ratio for 2017 was 0.59 with the 5 year median also being at 0.59. 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 the ratio is 2.35 with 5 year median of 1.99.
The Debt Ratio is good and has always been good. The Debt Ratio for 2017 is 2.23 with 5 year median at 2.46. The Leverage and Debt/Equity Ratios are good with the ones for 2017 at 1.75 and 0.75 with 5 year medians at 1.56 and 0.56.
The Total Return per year is shown below for years of 5 to 17. Under the Capital Gain column is the portion of the Total Return attributable to capital gains. Under the Dividend column is the portion of the Total Return attributable to dividends. See charts below.
As you can see from the chart below that very long term shareholders have done fine, but most of the return was in dividends. However, in the future the dividend part of the total return will not be as good in the future as in the past. This used to be an income trust company and income trusts have much higher dividend yields than corporation.
| Years | Div. Gth | Tot Ret | Cap Gain | Div. |
|---|---|---|---|---|
| 5 | -33.46% | -16.97% | -23.93% | 6.97% |
| 10 | -17.28% | 4.24% | -9.08% | 13.32% |
| 15 | -4.44% | 18.99% | -0.74% | 19.73% |
| 17 | 37.86% | 6.36% | 31.50% |
The 5 year low, median, and high median Price/Earnings per Share Ratios are negative at 6.95, 9.89 and 12.71. The corresponding 10 year ratios are positive at 11.60, 11.54 and 11.48. The corresponding historical ratios are 9.47, 14.43 and 11.81. The problem with P/E Ratio is that a lot are negative. The current P/E Ratio is a negative 15.03. The P/E Ratio for 2019 is expected to be 4.95. This is based on stock price of $4.36 and 2019 EPS estimate of $0.88. The P/E Ratio for 2019 is very low and would suggest that the stock price is relatively cheap.
I get a Graham Price of $17.97. This calculation can be affected by negative EPS also. The 10 year low, median, and high median Price/Graham Price Ratios are 1.48, 1.82 and 2.25. The current P/GP Ratio is 0.24. The stock price testing suggests that the stock price is relatively cheap.
I get a 10 year median Price/Book Value per Share Ratio of 1.68. The current P/B Ratio is 0.27 based on Book Value of $8,899M, Book Value per Share of $16.31 and a stock price of $4.36. The stock price testing suggests that the stock price is relatively cheap.
I get an historical median dividend yield of 8.57%. However, since this company used to be an income trust until 2009, we should use the median dividend yield since then which is 6.96%. The current dividend yield is 8.26% based on dividends of $0.36 and a stock price of $4.36. The current yield is some 19% above the median yield since 2009. This stock price testing suggests that the stock price is relatively reasonable and below the median and almost relatively cheap.
The 10 year median Price/Sales (Revenue) Ratio is 4.20. The current P/S Ratio is 0.62 based on 2018 Revenue estimate of $3, 829M, Revenue per Share of 7.02 and a stock price of $4.36. The current ratio is some 85% below the 10 year ratio. The stock price testing suggests that the stock price is relatively cheap.
You have to wonder what help the P/E Ratio or Graham Price is because of all the EPS losses. However, P/B Ratio, Dividend Yield and P/S Ratio testing is all pointing to a cheap price. This is hardly surprising as the stock has fallen a lot since hitting highs in 2010.
When I look at analysts’ recommendations, I find Strong Buy (1), Buy (8) and Hold (9). The consensus would be a Buy. The 12 month stock price consensus is $11.58. This implies a total return of 173.85% with 165.60% from capital gains and 8.26% from dividends.
Alan Tambosso on BOE Report says this company has engaged Sayer Energy Advisors to assist in the sale of its Duvernay oil rights. Cation Capital Inc reported on Financial Post the need for new leadership for this company. Richard Addington on Financial Mercury says analysts at Raymond James rated this stock at Market Perform. (See this about halfway into the article.) Kris Knutson on Motley Fool likes this stock. See what analysts are saying about this stock on Stock Chase. Some analysts think it is cheap and some do not care for this stock.
Crescent Point Energy Corp is in the business of acquiring, developing, and holding interests in petroleum and natural gas properties and other related assets. Its web site is here Crescent Point Energy Corp.
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 Wednesday, November 28, 2018 around 5 pm. Tomorrow on my other blog I will write about Money Show 2018 - Peter Ashton.... learn more on Tuesday, November 27, 2018 around 5 pm.
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. I am on Instagram. Or you can just Google #walktoronto spbrunner8166 to see my pictures.
Great words, Thanks for sharing!!
ReplyDeleteRegards
Wania Shiekh
Works for Mutual Funds in Pakistan