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. I do not invest much in energy stocks, but I do follow them because they are such a large part of the TSX.
When I was updating my spreadsheet, I noticed that this is an oil company and it has not made a profit since 2014. Analysts expect it to make a profit in 2022, but who knows. They have kept their dividend, for now, but have reduced it to $0.005 a year. The stock is also down some 65% this year so far. They do have cash flow.
The dividend yields are low with current dividend growth non-existent. The current dividend yield is low (under 1%) at just 0.23%. The 5 year median dividend yield is moderate (2% to 4% ranges) at 3.19%. The 10 year median dividend yield is good (5% to 6% ranges) at 6.34%. The 5 year median dividend yield is high (7% and above) at 7.40%. The stock used to be an income trust and this accounts for the high past dividend yields. They started to decrease the dividends in 2015 and this has continued in most years since.
The Dividend Payout Ratios (DPR) could be improved, but is covered by cash flow. The DPR for 2019 and the 5 year coverage cannot be calculated because of EPS losses. The DPR for CFPS for 2019 is 1% with 5 year coverage at 22%. They have good cash flow. The DPR for Free Cash Flow for 2019 is 5% with 5 year coverage at 153%. (This is due to some years of negative FCF.)
Debt Ratios are fine. The Long Term Debt/Market Cap for 2019 is fine at 0.88, but it drops to a current 2.06 because of the drop in the stock price this year. The Liquidity Ratio for 2019 is 0.81, but if you add in cash flow after dividend it is good at 3.04. The Debt Ratio for 2019 is 2.12. The Leverage and Debt/Equity Ratios are also quite good at 1.89 and 0.89, but do rise to 2.36 and 1.36 currently.
The Total Return per year is shown below for years of 5 to 18 to the end of 2019. 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. |
|---|---|---|---|---|---|
| 2014 | 5 | -57.12% | -22.80% | -26.46% | 3.66% |
| 2009 | 10 | -34.52% | -8.78% | -17.47% | 8.69% |
| 2004 | 15 | -23.06% | 11.45% | -6.87% | 18.32% |
| 2001 | 18 | -16.23% | 37.60% | 2.72% | 34.88% |
The Total Return per year is shown below for years of 5 to 18 to date. 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. |
|---|---|---|---|---|---|
| 2014 | 5 | -57.12% | -31.18% | -34.12% | 2.94% |
| 2009 | 10 | -34.52% | -17.80% | -26.62% | 8.82% |
| 2004 | 15 | -23.06% | 6.05% | -14.42% | 20.47% |
| 2001 | 18 | -16.23% | 11.99% | -10.22% | 22.21% |
The 5 year low, median, and high median Price/Earnings per Share Ratios are all negative. The corresponding 10 year ratios are 8.66, 6.67 and 4.69. The corresponding historical ratios are 5.07, 8.11 and 11.16. The current P/E Ratio is negative, as is the one for 2021. The P/E Ratio for 2022 is 214.00. Because of the years of earning losses, it really is not valid to do any P/E Ratio testing for stock price.
My best guess for a Graham Price is $1.11. The 10 year low, median, and high median Price/Graham Price Ratios are 2.09, 2.39 and 2.70. The current P/GP Ratio is 1.92 based on a stock price of $2.14. This stock price testing suggests that the stock price is relatively cheap.
I get a 10 year median Price/Book Value per Share Ratio of 1.08. The current P/B Ratio is 0.39 based on a Book Value of $2,912M, Book Value per Share of $5.50 and a stock price of $2.14. The current ratio is 64% below the 10 year ratio. This stock price testing suggests that the stock price is relatively cheap. A problem is that the book value has been falling and is down by 15% per year over the past 5 years. It almost fell 50% so far this year.
I get a 10 year median Price/Cash Flow per Share Ratio of 6.13. The current P/CF Ratio is 1.35 based on Cash Flow per Share estimate for 2020 of $1.59, Cash Flow of $842M and a stock price of $2.14. The current ratio is 78% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively cheap.
I get an historical median dividend yield of 7.40%. The current dividend yield is 0.23% based on dividends of $0.005 and a stock price of $2.14. The current dividend yield is 97% below the historical median dividend yield. This stock price testing suggests that the stock price is relatively expensive.
I get a 10 year median dividend yield of 6.54%. The current dividend yield is 0.23% based on dividends of $0.005 and a stock price of $2.14. The current dividend yield is 96% below the historical median dividend yield. This stock price testing suggests that the stock price is relatively expensive.
The 10 year median Price/Sales (Revenue) Ratio is 3.96. The current P/S Ratio is 0.65 based on Revenue estimate for 2020 of $1,739, Revenue per Share of $3.28 and a stock price of $2.14. The current P/S Ratio is 84% below the 10 year median ratio. This stock price testing suggests that the stock price is cheap expensive.
Results of stock price testing is that the stock price is probably cheap. The dividend yield test does not show this but dividends have been reduced around 99.9% over the last couple of years. This means that the dividend yield tests do not show us anything. The P/S Ratio test shows that the stock price is cheap. This is confirmed by the P/CF Ratio test and the P/B Ratio test. However, the Revenue is expected to fall 48% this year, the cash flow is expected to fall some 53% and the Book Value fell almost 50% so far this year. So, all the tests have problems.
Is it a good company at a reasonable price? The stock price is probably cheap. It would be a high risk. With the expected return over the next year of 24%, you have to wonder if it is worth the risk. They have cash flow still.
When I look at analysts’ recommendations, I find Strong Buy (1), Buy (3), Hold (3) and Sell (1). The consensus would be a Hold. The 12 month stock price is $2.64. This implies a total return of 23.60% with 23.36% from capital gains and 0.23% from dividends based on a stock price of $2.14.
Analysts on Stock Chase have varying views, but one mentions that this industry has been decimated. Jitendra Parashar Motley Fool thinks you should buy and hold this stock and become rich. The executive summary on Simply Wall Street say that this company is not forecast to become profitable over the next 3 years. Josef Schachter on BNN Bloomberg talks about this stock. A Simply Wall Street article on Yahoo Finance says that 5 analysts expect the company to break even by 2021..
Crescent Point Energy is an independent exploration and production company. 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 23, 2020 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.
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