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 the expected loss was $0.29 a share, but came in at a loss of $4.77. Last year analysts’ consensus was for a profit in 2019 of $0.88. After the heavier loss in 2018, another loss is expected this year at $0.19. There have been earnings losses since 2015.
The company was an income trust from 2003 to 2009. As an income trust it paid dividends and yields where high (over 16%). When they became a corporation, they kept the dividends flat until 2015 when they started to decrease the dividends. Dividends were decreased until 2017 and then decreased again in 2019.
The current dividend is low (under 2%) at 0.76%. The 5, 10 and historical median dividend yields are moderate (2% to 4% range) to good (5%). The 5, 10 and historical median dividend yields are 4.65%, 6.80% and 7.98%, respectively.
The Dividend Payout Ratios are not satisfactory. Neither the current DPR for EPS nor the 5 year coverage for EPS can be calculated because of earning losses. The DPR for CFPS for 2018 is 12% with 5 year coverage at 35%. This has fluctuated a lot over time. The DPR for Free Cash Flow cannot be calculated because of negative FCF. The 5 year coverage of FCF is 386%.
Debt Ratios are good except for the Long Term Debt/Market Cap Ratio and this is far too high. The Long Term Debt/Market Cap Ratio for 2018 is 1.83 but going down to 1.16 currently. The decrease is due to higher market cap and lower debt. A ratio of above 1.00 means that the market does not value the company equal to its long term debt and this is not good. The Liquidity Ratio is quite low at 0.85. If you added in cash flow after dividends it is 3.10 and this is good.
The Debt Ratio is good at 2.08 with 5 year median at 2.35. The Leverage and Debt/Equity Ratios are good at 1.93 and 0.93 with 5 year medians at 1.56 and 0.56.
The Total Return per year is shown below for years of 5 to 17 to the end of 2018. 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 chart below.
|From||Years||Div. Gth||Tot Ret||Cap Gain||Div.|
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 8.66, 6.67 and 4.69. The corresponding historical median ratios are 7.27, 11.27 and 11.48. The current P/E Ratio is a negative 40.69 based on a stock price of $5.29 and 2019 EPS estimate of $0.13 loss.
You cannot do P/E Ratio testing with negative ratios. The 10 year ratios are useless because of EPS losses. The P/E Ratio for 2020 is 27.84 based on a stock price of $5.29 and 2020 EPS estimate of $0.19. This stock price testing suggests that the stock price is relatively expensive.
I get a Graham Price of $7.05. 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 0.75 based on a stock price of $5.29. This stock price testing suggests that the stock price is relatively cheap. However, the Graham Price is an estimate because of all the EPS losses.
I get a 10 year median Price/Book Value per Share Ratio of 1.37. The current P/B Ratio is 0.89 based on a Book Value of $6,388M, Book Value per Share of $11.61 and a stock price of $5.29. The current ratio is some 67% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively cheap. However, note that the Book Value per Share has fallen 11% per year over the past 5 years.
I get an historical median dividend yield of 7.98%. The current dividend yield is 0.76% based on dividends of $0.04 and a stock price of $5.29. The current yield is 90% below the historical ones. This stock price testing suggests that the stock price is relatively expensive. However, this company used to be an income trust so had high yields in the past. Also, the company has been cutting dividends for the last few years.
I get a 10 year median dividend yield of 6.80%. The current yield at 0.76% is some 89% lower. This stock price testing suggests that the stock price is relatively expensive.
The 10 year median Price/Sales (Revenue) Ratio is 4.20. The current P/S Ratio is 0.88 based on 2019 Revenue estimate of $3,312M, Revenue per Share of $6.02 and a stock price of $5.29. The current ratio is some 79% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively cheap.
Results of stock price testing is that the stock price is probably cheap. The best test is the P/S Ratio test. It is also the only one I do not have a complaint about.
Is it a good company at a reasonable price? I would not personally buy this company. Not only is it a resource stock, but I do not like some of the debt ratio and the earnings losses. Dividends are going in the wrong direction. It seems to be cheap, but it seems also to be cheap for a reason.
When I look at analysts’ recommendations, I find Strong Buy (5), Buy (6) and Hold (3). The consensus would be a Buy. The 12 month stock price consensus is $7.27. This implies a total return of 38.19% with 0.76% from dividends and 37.43% from capital gains.
However, last year the consensus was a Buy and the 12 month stock price consensus was $11.58. This implied a total return of 173.85% with 165.60% from capital gains and 8.26% from dividends. However, the total return last year was a loss of 48.52% with a capital loss of 56.78% and 8.26% from dividends.
See what analysts are saying about this stock on Stock Chase. Analysts are saying that they are divesting assets and paying down debt. Matt Smith on Motley Fool thinks it is a good time to buy. A writer on Simply Wall Street would like to see the company can grow before investing. A writer on Simply Wall Street says the company would need to improve its operations for him to be interested. Josh Young on Seeking Alpha thinks the recent asset sales and stock buy backs may send the stock price higher.
Crescent Point Energy is an independent exploration and production company. At the end of 2018, the company had proved reserves of 620 million barrels of oil equivalent. 2018 production was 178,000/BOE per day, weighted approximately 80% crude oil. 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 Monday, November 25, 2019 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.
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