Is it a good company at a reasonable price? The stock price is reasonable if not cheap. They have started to increase their dividends and the yield is up to 3.04%. It would be better if they had good earnings. This is its main problem, that of not having earnings. They are increasing their Revenue and they have a positive Cash Flow. 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.
I do not own this stock of Crescent Point Energy Corp (TSX-CPG, NYSE-CPG). I got this idea to investigate 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 after several years of losses, the estimate for EPS for 2021 at 4.13 was impressively close to the EPS for 2021 which was $4.11 diluted and $4.15 basic. Then analysts expected EPS to drop to $1.28 and $1.13 for 2022 and 2023. They no longer expect that as new EPS for 2022 and 2023 are $3.88 and $2.22. They are still dropping, but not as much.
If you had invested in this company in December 2000, for $1,032.70 you would have bought 23 shares at $44.90 per share. In December 2021, after 10 years you would have received $273.30 in dividends. The stock would be worth $155.25. Your total return would have been $428.55.
| Cost | Tot. Cost | Shares | Years | Dividends | Stock Val | Tot Ret |
|---|---|---|---|---|---|---|
| $44.90 | $1,032.70 | 23 | 10 | $273.30 | $155.25 | $428.55 |
The dividend yields are moderate with dividend growth restarting. The current dividend yield is moderate (2% to 4% ranges) at 3.04%. The 5 year median dividend yield is low (below 2%) at 0.84%. The 10 year median dividend yield is moderate at 3.92% and the historical median dividend yield is high (7% and over) at 7.23%. The last dividend increase was in 2022 and it was for 23%.
This company used to be an income trust. Income trust generally had very high dividend yields. In 2009, it switched to a corporation because changes to the law. The company kept the dividends flat from 2010 to 2015. Then dividends were decreased until 2020. The company only paid three dividends in 2021. Since then, dividends have increased a lot, from $0.0025 a quarter to $0.08 a quarter or some 3100%. Dividends are still down some 88% from their peak of $2.76 per year to the current $0.32 a year. Because they are no longer an Income Trust company, dividend yields will never go back to what they were. All income trusts have either flattered their dividends or decrease them.
The Dividend Payout Ratios (DPR) are fine. The DPR for EPS for 2021 is 0.18%. I cannot calculate a 5 year coverage because of EPS losses. The DPR for EPS for 2022 is expected to be around 15%. The DPR for Adjusted Earnings per Share (AEPS) for 2021 is 0.3% with 5 year coverage at 5.7%. The DPR for AEPS in 2022 is expected to be around 6%. The DPR for Cash Flow per Share (CFPS) for 2021 is 0.3% with 5 year coverage at 6%. The DPR for CFPS is expected to be around 14% in 2022. The DPR for Free Cash Flow for 2021 is 6% with 5 year coverage at 39%. The DPR for FCF for 2022 is expected to be around 10%.
Debt Ratios are fine. The Long Term Debt/Market Cap Ratio for 2022 is fine at 0.66. The Liquidity Ratio for 2021 is low at 0.40. If you add in Cash Flow after dividends it is fine at 1.84. The Debt Ratio is good at 2.44. The Leverage and Debt/Equity Ratios are good at 1.70 and 0.70.
The Total Return per year is shown below for years of 5 to 20 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 | -57.94% | -17.02% | -18.04% | 1.02% |
| 2011 | 10 | -44.61% | -12.90% | -17.26% | 4.36% |
| 2006 | 15 | -31.92% | 9.66% | -6.19% | 15.85% |
| 2001 | 20 | -22.15% | 37.55% | 3.24% | 34.31% |
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 negative and unusable. The corresponding historical ratios are 2.88, 6.20 and 9.52. The current P/E Ratio is 2.71 based on a stock price of $10.52 and EPS estimate for 2022 of $3.88. Measured against the historical ratios, the ratio is below the low of the historical median. This stock price testing suggests that the stock price is relatively cheap. Problem with this test is all the negative P/E Ratios and the very low historical median P/E Ratios.
I have Adjusted Earnings per Share (AEPS) data. The 5-year low, median, and high median Price/Adjusted Earnings per Share Ratios are 4.59, 10.85 and 18.97. The corresponding 10 year ratios are 17.34, 25.12 and 36.83. The current P/AEPS Ratio is 6.62 based on a stock price of $10.52 and AEPS for the last 12 months of $1.59. This current ratio is below the low of the 10 year median ratios. This stock price testing suggests that the stock price is relatively cheap. The problem is the huge range the P/AEPS ratios running from a low of 3.37 to a high of 135.35.
I get a Graham Price of $33.09. The 10-year low, median, and high median Price/Graham Price Ratios are 0.27, 0.36 and 0.49. The current P/GP Ratio is 0.32 based on a stock price of $10.52. 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. Problem with this test is the P/GP Ratios are very low ratios. A normal spread is a low ratio below 1.00, a median ratio of around 1.00 and a high ratio above 1.00 (and generally not higher than 1.50).
I get a 10-year median Price/Book Value per Share Ratio of 0.79. The current P/B Ratio is 0.85 based on a stock price of $10.52, Book Value of $7,213M and a Book Value per Share of $12.45. The current ratio is 7% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable but above the median.
I get a 10-year median Price/Cash Flow per Share Ratio of 3.75. The current P/CF Ratio is 2.62 based on Cash Flow per Share estimate for 2022 of $4.02, Cash Flow of $2,330M and a stock price of $10.52. The current ratio is 30% 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 7.23%. The current dividend yield is 3.04% based on dividends of $0.32 and a stock price of $10.52. The current dividend yield is 58% below the historical median dividend yield. This stock price testing suggests that the stock price is relatively expensive.
I get an historical median dividend yield of 3.92%. The current dividend yield is 3.04% based on dividends of $0.32 and a stock price of $10.52. The current dividend yield is 22% below the historical median dividend yield. This stock price testing suggests that the stock price is relatively expensive.
The problem with these dividend yield tests is that the stock is not a dividend growth stock. It used to be an income trust company and those types of companies could pay a lot more in dividends than corporations could. Changing to a corporation has been tough on all income trust. Some cut their dividend a lot (70% to 90%) and then later started to grow their dividends. Some let them flat and hoped eventually their earnings could support the dividends. Most in the end had to cut dividends.
The 10-year median Price/Sales (Revenue) Ratio is 2.06. The current P/E Ratio is 1.40 based on Revenue estimate for 2022 of $4,354M, Revenue per Share of $7.51 and a stock price of 10.52. The current ratio is 32% 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 test is showing this. There are problems with the dividend tests as noted above. The other tests with no real problems are the P/CF Ratio test and the P/B Ratio test. One shows the stock price as cheap and the other as reasonable.
When I look at analysts’ recommendations, I find Strong Buy (5), Buy (6) and Hold (2). The consensus would be a Strong Buy. The 12 month stock price consensus is $14.69. This implies a total return of 42.68% with 39.64% from capital gains and 3.04% from dividends based on a stock price of $10.52.
Last year when I look at analysts’ recommendations, I found Strong Buy (4), Buy (7), Hold (3) and Underperform (1). The consensus would be a Buy. The 12 month stock price consensus was $9.13. This implies a total return of 58.12% with 2.05% from dividends and 56.07% from capital gains based on a stock price of $5.85. What happened was a stock price of $10.52 and so a total return of 81.88% with 79.83% from capital gains and 2.05% from dividends based on a stock price of $5.85.
Analysts on Stock Chase mostly like this stock and think it is a buy. Stock Chase gives this stock 5 stars out of 5. It is on Money Sense list with a B rating. Andrew Walker on Motley Fool thinks it is time to buy this stock after its recent pullback. Christopher Liew on Motley Fool thinks that you should still hold this stock, even though the price of oil per barrel is down. The company has put out a Press Release on their 2021 results. The company put out a Press Release on their third quarter of 2022 results.
Simply Wall Street on Yahoo Finance talks about the company’s third quarter results. Simply Wall Street has 3 warnings on this stock of earnings are forecast to decline by an average of 47.5% per year for the next 3 years; unstable dividend track record and profit margins (54.3%) are lower than last year (90.3%).
Crescent Point Energy Corp is an independent exploration and production company. It is engaged in acquiring, developing, and holding interests in petroleum and natural gas properties and assets related thereto through a general partnership and wholly-owned subsidiaries. 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 Friday, November 11, 2022 around 5 pm. Tomorrow on my other blog I will write about James Pethokoukis – Substack .... learn more on Thursday, November 10, 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.
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