Is it a good company at a reasonable price? The stock price is probably cheap or it may be reasonable. However, for a relatively cheap stock, the upside from analysts is not that much at 19% over the next year. It is an energy stock, and so it is risky. I tend not to buy energy stocks because of the cyclical nature of these stocks. If I do buy, I do not consider them long term holds. However, energy makes up a large part of the TSX and so I do follow a number of stocks in this sector.
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.
When I was updating my spreadsheet, I noticed analysts expected Revenue to jump 212% from $13,227 to $41,316. Revenue jumped 250% to $46,357. They did not do as well with EPS. Analysts expected a jump of 158% from an earnings loss of $1.94 to earnings of $1.13. However, earnings came in only at $0.27.
If you had invested in this company in December 2011, for $1,029.20. you would have bought 31 shares at $33.20 per share. In December 2021, after 10 years you would have received $146.56 in dividends. The stock would be worth $480.81. Your total return would have been $627.37.
| Cost | Tot. Cost | Shares | Years | Dividends | Stock Val | Tot Ret |
|---|---|---|---|---|---|---|
| $33.20 | $1,029.20 | 31 | 10 | $146.56 | $480.81 | $627.37 |
The dividend yields are low with dividend growth restarting. The current dividend yield is low (below 2%) at 1.50%. The 5 year, 10 year and historical median dividend yields also low at 1.36%, 1.74% and 1.45%. Dividends reach a peak in 2014 at $1.06. They declined from there to 2018 where they were $0.20. In 2020, only one dividend was paid, rather than 4. There was an increase in quarterly dividends in 2022 of 200% and dividends were increased to an annual amount of $0.42. In the 29 years I have tracked the dividends, they have increased in 12 years and decreased in 6 years and were flat the rest of the time.
The Dividend Payout Ratios (DPR) are current good. The DPR for EPS for 2021 is 32% with 5 year coverage at 77%. I have Funds from Operations data (FFO) from the company and the DPR for FFO for 2021 is 4% with 5 year coverage at 5%. The DPR for Cash Flow per Share (CFPS) for 2021 is 2% with 5 year coverage at 7%. The DPR for Free Cash Flow (FCF) for 2021 is 5% with 5 year coverage at 14%.
Debt Ratios are fine. The Long Term Debt/Market Cap for 2021 is 0.40 and is fine. The Liquidity Ratio for 2021 is good at 1.64 and the Debt Ratios for 2021 are good at 1.77. The Leverage and Debt/Equity Ratio for 2021 are fine at 2.29 and 1.29.
The Total Return per year is shown below for years of 5 to 29 to the end of 2021. 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. |
|---|---|---|---|---|---|
| 2016 | 5 | -15.24% | -4.42% | -5.24% | 0.82% |
| 2011 | 10 | -20.61% | -5.54% | -7.33% | 1.79% |
| 2006 | 15 | -6.14% | -0.67% | -3.40% | 2.73% |
| 2001 | 20 | -0.61% | 6.09% | 2.26% | 3.83% |
| 1996 | 25 | 1.14% | 8.14% | 4.32% | 3.82% |
| 1992 | 29 | 1.45% | 10.49% | 6.24% | 4.25% |
The 5-year low, median, and high median Price/Earnings per Share Ratios are 2.95, 4.83 and 6.71. The corresponding 10 year ratios are 12.66, 16.70 and 18.94. The corresponding historical ratios are 12.93, 15.59 and 18.25. The current P/E Ratio is 6.84 based on a stock price of $28.06 and EPS estimate for 2022 of $4.10. The current ratio is below the low of the 10 year median ratio. This stock price testing suggests that the stock price is relatively cheap.
I also have Fund from Operations (FFO) data. The 5-year low, median, and high median P/FFO Ratios are 3.41, 5.57 and 7.11. The corresponding 10 year ratios are 5.49, 6.25 and 7.65. The current P/FFO Ratio is 8.27 based on a stock price of $28.06 and FFO for last 12 months of $3.39. This ratio is above high of the 10 year median ratios. This stock price testing suggests that the stock price is relatively expensive.
I get a Graham Price of $34.80. The 10-year low, median, and high median Price/Graham Price Ratios are 0.69, 1.09 and 1.48. The current P/GP Ratio is 0.81 based on a stock price of $28.06. The current ratio is between the low and median ratio of the 10 year median ratios. This stock price testing suggests that the stock price is relatively reasonable and below the median.
I get a 10-year median Price/Book Value per Share Ratio of 1.17. The current P/B Ratio is 2.14 based on a stock price of $28.06, Book Value of $26,275M and Book Value per Share of $13.13. The current ratio is 82% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively expensive.
I also have a Book Value per Share estimate for 2022. This estimate is for $14.50. This would give us a Book Value of $29,708M, and a ratio of 1.94 with a stock price of $28.06. Since the 10 median ratio is 1.17, this new ratio is 65% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively expensive.
I get a 10-year median Price/Cash Flow per Share Ratio of 5.73. The current P/CF Ratio is 4.48 based on Cash Flow per Share estimate of $6.26, Cash Flow of $12, 528 and a Stock Price of $28.06. The current P/CF ratio is 22% 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 1.50% based on dividends of $0.42 and a stock price of $28.06. The current yield is 3% above the historical median dividend yield. This stock price testing suggests that the stock price is relatively reasonable and below the median.
I get a 10 year median dividend yield of 1.74%. The current Dividend Yield is 1.50% based on dividends of $0.42 and a stock price of $28.06. The current yield is 14% below the 10 year median dividend yield. This stock price testing suggests that the stock price is relatively reasonable but above the median.
The 10-year median Price/Sales (Revenue) Ratio is 1.05. The current P/S Ratio is 0.82 based on Revenue estimate for 2022 of $68,538M, Revenue per Share of $34.25 and a stock price of $28.06. The current ratio is 22% 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 to reasonable. The dividend yield testing is say the price is reasonable, but this testing is best on companies increasing their dividends. This company varies it dividends. The P/S Ratio test is showing that the stock price is cheap and so does the P/CF Ratio test. (It is interesting that the P/FFO Ratio test says it is expensive.)
When I look at analysts’ recommendations, I find Strong Buy (7) and Buy (11). The consensus would be a Strong Buy. The 12 month stock price consensus is $33.00. This implies a total return of 19.10% with 17.61% from capital gains and 1.50% from dividends based on a stock price of $28.06.
Analysts on Stock Chase have various recommendations from Buy to Sell. Stock Chase gives this stock 5 stars out of 5. Andrew Button on Motley Fool says this stock is currently defying the market and if oil prices stay strong, good things are in store. Karen Thomas on Motley Fool says that the continued strong oil and gas prices suggest continued outperformance. The company put out a Press Release on their 2021 results. The company put out a Press Release on their Second Quart of 2022 results.
Simply Wall Street via Yahoo Finance reviews this stock. Simply Wall Street gives one risk of earnings are forecast to decline by an average of 11% per year for the next 3 years.
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 Friday, November 4, 2022 around 5 pm. Tomorrow on my other blog I will write about Something to Buy November 2022.... learn more on Thursday, November 03, 2022 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