I do not own this stock of Cenovus Energy Inc (TSX-CVE, NYSE-CVE). I had held this stock previously as Alberta Energy Company from April 2000 until August 2002. This is another stock that was talked about at the 2010 Money Show in Toronto. There were those who liked oil companies and they mentioned both Suncor Energy Inc. (TSX-SU) and Cenovus Energy Inc. (TSX-CVE). This company was split off from EnCana (TSX-ECA) in 2009. My spreadsheet reflects this split. I was also following Alberta Energy Co. (TSX-AEC) into EnCana.
When I was updating my spreadsheet, I noticed analysts expect a good recovery this year. They expect the Revenue to go up some 204% from $13,591 to $41,316 and the EPS to go up 158% from a loss of $1.94 to earnings of $1.13 and then up some 77% in 2022 to $2.00.
The dividend yields are currently low with dividend growth declining. The current dividend yield is low (below 2%) at just 0.46%. Dividends hit a high in 2014 and have basically been declining ever since. The problem being that they recently have had some years with big earnings losses. In 2020, they only paid one dividend, in 2021, they paid 4 dividends again. Analysts expect the dividends to rise in the near term. The 5 year and historical median dividend yields are low at 1.36% and 1.45%. the 10 year median dividend yield is moderate (2% to 4% ranges) at 2.14%.
The Dividend Payout Ratios (DPR) are expected to improve in 2021. The DPR for EPS for 2020 is not calculable due to an Earnings loss in 2020. The 5 year coverage is 1250%. The DPR for EPS for 2021 is expected to be 6.2%, with 5 year coverage at 40%. The DPR for CFPS for 2020 is 52% with 5 year coverage at 10%. The DPR for Free Cash Flow for 2020 is not calculable due to a negative FCF. The 5 year coverage is 33%. The DPR for FCF for 2021 is expected to be 2% with 5 year coverage at 13%.
Debt Ratios are fine. The Long Term Debt/Market Cap for 2020 is 0.72 and so is fine. The Liquidity Ratio for 2020 is low at 1.26. I like this to be at 1.50 or above. The Debt Ratio is good at 2.04. The Leverage and Debt/Equity Ratios for 2020 are 1.96 and 0.96 and therefore good.
The Total Return per year is shown below for years of 5 to 28 to the end of 2020. 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 and so unusable. The corresponding 10 year ratios are 10.20, 12.22 and 14.25. The corresponding historical ratios are 12.81, 15.02 and 16.98. The current P/E Ratio is 13.39 based on a stock price of $15.13 and 2021 EPS estimate of $1.13. The current ratio is between the median and high ratios of the 10 year median ratios. This stock price testing suggests that the stock price is relatively reasonable but above the median. This is not a good test when there are earning losses.
I get a Graham Price of $22.11. The 10 year low, median, and high median Price/Graham Price Ratios are 0.76, 0.96 and 1.17. The current P/GP Ratio is 0.94 based on a stock price of $15.13. The current ratio is between the low and median ratios of the 10 year median ratios. This stock price testing suggests that the stock price is relatively reasonable and below the median.
However, analysts expect a fast rise in EPS and the Graham Price for 2022 is expected to be $29.42 and this gives a P/GP Ratio of 0.51 based on a stock price of $15.13. This ratio is below the low of the 10 year median ratios. 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 1.37. The current P/B Ratio is 0.79 based on a Book Value of $23,629M, Book Value per Share of $19.23 and a stock price of $15.13. The current ratio is 42% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively cheap.
I get a 10 year median Price/Cash Flow per Share Ratio of 6.23. The current P/CF Ratio is 4.07 based on Cash Flow per Share estimate for 2021 of $3.72. The current ratio is 35% 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 1.45%. The current dividend yield is 0.46% based on dividends of $0.07 and a stock price of $15.13. The current yield is 68% below the historical dividend yield. This stock price testing suggests that the stock price is relatively expensive. However, this is not a good test because of declining dividends.
I get a 10 year median dividend yield of 2.14%. The current dividend yield is 0.46% based on dividends of $0.07 and a stock price of $15.13. The current yield is 78% below the historical dividend yield. This stock price testing suggests that the stock price is relatively expensive. However, this is also not a good test because of declining dividends.
The 10 year median Price/Sales (Revenue) Ratio is 1.16. The current P/S Ratio is 0.45 based on Revenue estimate for 2021 of $41,316M, Revenue per Share of $33.62 and a stock price of $15.13. The current ratio is 61% 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 P/S Ratio testing shows this as does the P/B Ratio and the P/CF Ratio testing. The dividend yield testing would not be good because of declining dividends.
Is it a good company at a reasonable price? The stock price is probably cheap. However, this company is an Oil and Gas Energy company and therefore of high risk. A lot of the anti-oil and gas policies are being pushed by elites. There are a lot of ordinary people protesting against the elitist policies. We live in interesting times and it is hard to know how this will all end.
When I look at analysts’ recommendations, I find Strong Buy (9) and Buy (11). The consensus would be a Buy. The 12 month stock price is $18.66. This implies a total return of 23.79% with 23.33% from capital gains and 0.46% from dividends.
Some analyst on Stock Chase like this company, but opinions vary. Robin Brown on Motley Fool thinks you should buy this stock while it is cheap. The Executive Summary on Simply Wall Street gives this stock 3 stars out of 5 and lists 3 risks. Amy Legate-Wolfe on Motley Fool says that this stock could double in 2022. Adam Othman on Motley Fool says energy stocks are going gangbuster now. Cenovus Energy CEO Alex Pourbaix has an interview on CBC News with West of Centre host Kathleen Petty.
Cenovus Energy is an integrated oil company, focused on creating value through the development of its oil sands assets. The company also engages in production of conventional crude oil, natural gas liquids, and natural gas in Alberta, Canada, with refining operations in the U.S. Its web site is here Cenovus Energy Inc.
The last stock I wrote about was about was Keyera Corp (TSX-KEY, OTC-KEYUF) ... learn more. The next stock I will write about will be Johnson and Johnson (NYSE-JNJ) ... learn more on Wednesday, November 03, 2021 around 5 pm. Tomorrow on my other blog I will write about Dividend Stocks November 2021 .... learn more on Tuesday, November 2, 2021 around 5 pm.
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