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 future EPS from analysts are for 2021, 2022 and 2023 are $4.13, $1.28, and $1.13. The big increase in 2021 is because of impairment reversal. Impairment charges and reversals are a one time thing, so that is why the EPS is given as much higher for 2021. It is probably true as the 12 month EPS to the end of the third quarter is $3.84.
When good shareholders total returns were made in the past it was because of high dividends paid by an income trust. Since this company is now a corporation, this will not occur in the future.
The dividend yields are currently moderate with dividend growth restarting. The current dividend yield is moderate (2% to 4% ranges) at 2.05%. The 5 year median dividend yield is also moderate at 2.71%. This 10 year median dividend yield is good (5% to 6% ranges) at 5.54%. The historical median dividend yield is high (7% and above) at 7.31%.
This stock used to be an income trust and income trusts have much higher yields than corporations. Income Trusts can payout more than the EPS, but not corporations. They did not get the DPR for EPS under control since changing to a corporation. They also have not been making much money lately as 6 of the last 6 years had earning losses. They are expected to have positive earnings in 2021. In 2021 they started to raise the dividends again after a number of years of dividend decline.
The Dividend Payout Ratios (DPR) are expected to improve. The DPR for EPS for 2020 is not calculable because of earnings losses. It is the same story with the 5 year coverage. The DPR for EPS for 2021 is expected to be around 1% with the DPR for EPS for 2022 at around 9%. The DPR for CFPS for 2020 is 2% with 5 year coverage at 10%. The DPR for Free Cash Flow for 2020 is 6% with 5 year coverage at 92%. However, how different site calculate the FCF varies greatly.
Debt Ratios are fine. The Long Term Debt/Market Cap Ratio for 2020 is 1.29 and too high. However, that was due to a dip in the stock price in 2020. The current ratio is fine at 0.62. The Liquidity Ratio for 2020 is 0.42. However, if you add in cash flow after dividends the ratio is good at 1.68. The Debt Ratio is good at 1.74. The Leverage and Debt/Equity Ratios are fine at 2.35 and 1.35.
The Total Return per year is shown below for years of 5 to 19 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. |
|---|---|---|---|---|---|
| 2015 | 5 | -59.31% | -26.18% | -28.70% | 2.53% |
| 2010 | 10 | -37.53% | -15.95% | -23.66% | 7.71% |
| 2005 | 15 | -25.60% | 6.39% | -12.14% | 18.52% |
| 2001 | 19 | -17.66% | 37.51% | -0.96% | 38.48% |
The 5 year low, median, and high median Price/Earnings per Share Ratios are all negative and so unusable. The corresponding 10 year ratios are also all negative and unusable. The corresponding historical ratios are 3.98, 7.16 and 10.34. The current P/E Ratio is 1.42 based on a stock price of $5.85 and 2021 EPS estimate of $4.13. The EPS estimate for 2021 includes an impairment reversal, so is quite low, or really exceedingly low and so points to a very cheap price. This is not a good test as EPS estimate is unusually high.
The P/E Ratio for 2022 is somewhat higher at 4.57 and based on a stock price of $5.85 and 2022 EPS of $1.28. If we can compare this to the historical ratios, this stock price testing suggests that the stock price is relatively reasonable and below the median. But all these ratios are really low. You have to wonder how good the P/E Ratio tests are.
I get a Graham Price of $17.02 for 2022. The Graham Price for 2021 includes the very high EPS expected in 2021 and is probably not valid. The 10 year low, median, and high median Price/Graham Price Ratios are 0.64, 0.77 and 0.95. The current P/GP Ratio is 0.34 based on a stock price of $5.85. This stock price testing suggests that the stock price is relatively cheap. However, you got to wonder how good this test is also.
I get a 10 year median Price/Book Value per Share Ratio of 0.90. The current P/B Ratio is 0.58 based on a Book Value of $5,334M, Book Value per Share of $10.06 and a stock price of $5.85. The current ratio is 36% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively cheap. The problem with this testing is that the Book Value per Share has been dropping by 23% per year over the past 5 years and 13% per year over the past 10 years. It is dropping because of the lack of earnings over the past 6 years.
I get a 10 year median Price/Cash Flow per Share Ratio of 5.06. The current P/CF Ratio is 2.28 based on Cash Flow per Share estimate for 2021 of $2.57, Cash Flow of $1,362M and a stock price of $5.85. The current ratio is 55% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively cheap. This maybe a fine test as the 12 month Cash Flow to the end of the third quarter is $1,237M. The Cash Flow is certainly currently going in the right direction.
I get an historical median dividend yield of 7.31%. The current dividend yield is 2.05% based on dividends of $0.12 and a stock price of $5.85. The current dividend yield is 72% below the 10 year median dividend yield. This stock price testing suggests that the stock price is relatively expensive. The problem with this test is that company used to be an income trust with very high dividend yields and also the dividends have been cut recently.
I get an historical median dividend yield of 5.54%. The current dividend yield is 2.05% based on dividends of $0.12 and a stock price of $5.85. The current dividend yield is 63% below the 10 year median dividend yield. This stock price testing suggests that the stock price is relatively expensive. The problem with this test is that company used to be an income trust with very high dividend yields and also the dividends have been cut recently.
The 10 year median Price/Sales (Revenue) Ratio is 3.00. The current P/S Ratio is 0.99 based on Revenue estimate for 2021 of $3,128M, Revenue per share of $5.90 and a stock price of $5.85. The current ratio is 67% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively cheap. The revenue for the last 12 month to the end of the third quarter is $2,754M. Revenue is certainly going in the direction of the estimate.
Results of stock price testing is that the stock price is probably cheap. The only good tests seem to the P/S Ratio test and the P/CF Ratio test. Both these test show that the stock price is cheap. There are problems with the other tests.
Is it a good company at a reasonable price? The stock price is probably cheap. However, this company is in the oil and gas business. This is a cyclical business and is also a risky business. There is also a lot of uncertainties because of pushes to get rid of oil and gas because of Climate Change policies and rhetoric. There is going to be a lot of problems with getting off oil and gas. We have not yet got of coal, for heaven sake.
When I look at analysts’ recommendations, I find Strong Buy (4), Buy (7), Hold (3) and Underperform (1). The consensus would be a Buy. The 12 month stock price consensus is $9.13. this implies a total return of $58.12% with 2.05% from dividends and 56.07% from capital gains.
Some analysts on Stock Chase do not care for the management of this company. Ambrose O'Callaghan on Motley Fool thinks that this company has been performing well. Karen Thomas on Motley Fool says that this company is re-emerging with new management. The Executive Summary on Simply Wall Street gives this stock 4 starts out of 5 and lists 6 risks. A writer on Simply Wall Street says the intrinsic value of this stock is $12.21. A writer on Simply Wall Street says it's free cashflow was significantly lower than its statutory profit, raising questions about how useful that profit figure really is. The company announces its third quarterly results on Newswire.
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 15, 2021 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.
No comments:
Post a Comment