Is it a good company at a reasonable price? This is a resource stock so it would be cyclical. The stock was up to $40.21 in 2011. I generally view resource stocks as short term investments. Although I have had some for the long term, but they consist of 1% of my portfolio. Good to track resource stocks as Canada is considered a resource country. Dividends have been volatile so it would not be a great income stock. Stock price seems in the reasonable range at the moment.
I do not own this stock of Cenovus Energy Inc (TSX-CVE, NYSE-CVE). 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 analyst expect revenue to drop this year from $66,897M in 2022 to $56,371M in 2023. Also, analysts expect EPS to drop this year from $3.20 in 2022 to $1.76 in 2023. The Revenue and EPS for the first two quarters support this. However, the company has been raising the dividend payments by some 200% in 2022, 33% in 2023. The company raising the dividends this fast implies that the future as bright.
If you had invested in this company in December 2012, for $1,031.99 you would have bought 31 shares at $33.29 per share. In December 2022, after 10 years you would have received $160.94 in dividends. The stock would be worth $814.37. Your total return would have been $975.31. This is a total return would be a total loss of 4.08% per year with 5.32% from capital loss and 1.25% from dividends.
| Cost | Tot. Cost | Shares | Years | Dividends | Stock Val | Tot Ret |
|---|---|---|---|---|---|---|
| $33.29 | $1,031.99 | 31 | 11 | $160.94 | $814.37 | $975.31 |
The current dividend yield is moderate with dividend growth moderate, but past history of dividends show dividends are volatile. The current dividend yield is moderate (2% to 4% ranges) at 2.09%. The 5, 10 and historical dividend yields are low (below 2%) at 1.48%, 1.60% and 1.45%. The last dividend increase was in 2023 and it was for 33%. Over the past 30 years, dividends have gone up in 13 years and down in 6 years. The last decrease was in 2020, then dividends were quickly raised between 2021 and 2023. Over the past 5 years, dividends have been raised by 11.8% per year. The company’s history points to dividends being rather volatile.
The Dividend Payout Ratios (DPR) are currently fine. The DPR for 2022 for Earnings per Share (EPS) is 15% with 5 year coverage at 90%. The DPR for 2022 for Funds from Operations (FFO) is 10% with 5 year coverage at 6%. The DPR for 2022 for Cash Flow per Share (CFPS) is 6% with 5 year coverage at 7%. The DPR for 2022 for Free Cash Flow (FCF) is 12% with 5 year coverage at 12%.
| Item | Cur | 5 Years |
|---|---|---|
| EPS | 14.50% | 90.04% |
| FFO | 9.66% | 5.60% |
| CFPS | 6.12% | 7.45% |
| FCF | 11.65% | 12.23% |
Debt Ratios are good. The Long Term Debt/Market Cap Ratio for 2022 is good at 0.17. The Liquidity Ratio for 2022 is fine at 1.55. The Debt Ratio for 2022 is good at 1.98. The Leverage and Debt/Equity Ratios for 2022 are fine at 2.03 and 1.03 and are currently good at 1.97 and 0.97
| Type | Year End | Ratio Curr |
|---|---|---|
| Lg Term R | 0.17 | 0.17 |
| Intang/GW | 0.06 | 0.06 |
| Liquidity | 1.55 | 1.50 |
| Liq. + CF | 2.89 | 2.76 |
| Debt Ratio | 1.98 | 2.03 |
| Leverage | 2.03 | 1.97 |
| D/E Ratio | 1.03 | 0.97 |
The Total Return per year is shown below for years of 5 to 30 to the end of 2022 in CDN$. 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. |
|---|---|---|---|---|---|
| 2017 | 5 | 11.84% | 19.26% | 18.01% | 1.25% |
| 2012 | 10 | -8.81% | -0.92% | -2.34% | 1.42% |
| 2007 | 15 | -0.61% | 0.50% | -1.46% | 1.96% |
| 2002 | 20 | 4.21% | 7.02% | 4.08% | 2.95% |
| 1997 | 25 | 6.90% | 10.80% | 7.24% | 3.56% |
| 1992 | 30 | 6.19% | 11.36% | 7.91% | 3.45% |
The Total Return per year is shown below for years of 5 to 17 to the end of 2022 in US$. 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. |
|---|---|---|---|---|---|
| 2017 | 5 | 10.14% | 17.50% | 16.28% | 1.22% |
| 2012 | 10 | -11.56% | -4.08% | -5.32% | 1.25% |
| 2007 | 15 | -2.68% | -1.62% | -3.51% | 1.88% |
| 2005 | 17 | 5.02% | 1.73% | -0.72% | 2.45% |
The 5-year low, median, and high median Price/Earnings per Share Ratios are 5.09, 6.76 and 7.87. The corresponding 10 year ratios are 5.36, 7.07 and 8.77. The corresponding historical ratios are 12.81, 15.02 and 16.98. The current P/E Ratio is 11.03 based on a stock price of $26.80 and EPS estimate of $2.43. The current ratio is above the high ratio of the 10 year median ratios. This stock price testing suggests that the stock price is relatively expensive. Ratios are low because of negative ratios. A P/E Ratio of 11.03 is not a high ratio.
I also have Funds from Operations (FFO) data. The 5-year low, median, and high median Price/ Funds from Operations per Share Ratios are 4.49, 5.93 and 7.11. The corresponding 10 year ratios are 4.72, 6.22 and 7.65. The current P/FFO Ratio is 12.13 based FFO for the last 12 months of $2.2 and a stock price of $26.80. The current ratio is above the high ratio of the 10 year median ratios. This stock price testing suggests that the stock price is relatively expensive.
I get a Graham Price of $27.95. The 10-year low, median, and high median Price/Graham Price Ratios are 0.51, 0.80 and 1.23. The current P/GP Ratio is 0.96 based on a stock price of $26.80. 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.
I get a 10-year median Price/Book Value per Share Ratio of 1.17. The current P/B Ratio is 1.88 based on a Book Value of $27,279M, Book Value of $14.29 and a stock price of 26.80. The current ratio is 59.8% above the 1`0 year median ratio. This stock price testing suggests that the stock price is relatively expensive.
I also have Book Value per Share (BVPS) estimate for 2023 of $15.40. This implies a Book Value of $2,9402M and ratio of 1.74 with a stock price of $26.80. This ratio of 48% 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 6.29. The current P/CF Ratio is 5.47 based on a stock price of $26.80, Cash Flow per Share estimate for 2023 of $4.90 and Cash Flow of $9,355M. The current ratio is 13% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable and below the median.
I get an historical median dividend yield of 1.45%. The current dividend yield is 2.09% based on dividends of $0.56 and a stock price of $26.80. The current dividend yield is 44% above the historical median dividend yield. This stock price testing suggests that the stock price is relatively cheap.
I get a 10 year median dividend yield of 1.60%. The current dividend yield is 2.09% based on dividends of $0.56 and a stock price of $26.80. The current dividend yield is 31% above the 10 year median dividend yield. This stock price testing suggests that the stock price is relatively cheap.
The 10-year median Price/Sales (Revenue) Ratio is 0.89. The current P/S Ratio is 0.91 based on Revenue estimate for 2023 of $56,371M. The current ratio is 2% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable but above the median.
Results of stock price testing is that the stock price is probably reasonable. The dividend yield testing says that the stock price is relatively cheap. However, the P/S Ratio test does not confirm this and says the stock price is reasonable. The rest of the testing goes from reasonable to expensive.
When I look at analysts’ recommendations, I find Strong Buy (8), Buy (10) and Hold (1). The consensus would be a strong buy. The 12 months stock price consensus is $32.79, with a high of $37.00 and low of $26.50. The 12 months consensus price of $32.79 implies a total return of 24.44% with 22.35% from capital gains and 2.09% from dividends.
Some analysts on Stock Chase like this stock, but one prefers CNQ. Stock Chase gives this stock 5 stars out of 5. It is not on any dividend list I follow. Robin Brown on Motley Fool thinks this is a place for growth in 2024. Christopher Liew on Motley Fool says this stock is a buy. The company put out a Press Release on their 2022 results. The company put out a Press Release on their second quarter of 2023 results. Zacks put out a report via Yahoo Finance about this stock.
Simply Wall Street put out a report on Yahoo Finance about who owns this company. Simply Wall Street gives this stock 3 and one half stars out of 5. They have one warning of unstable dividend track record.
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 Saturday, November 04, 2023 around befor 10 am. Tomorrow on my other blog I will write about Something to Buy November 2023 learn more on Thursday, November 02, 2023 around 5 pm.
This blog is meant for educational purposes only and is not to provide investment advice. I am not a licensed professional investment advisor. 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.
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