Is it a good company at a reasonable price? This is a resource stock and I always view them as short term buys. Although the stock price is mostly showing as reasonable, the stock is down a lot this month. Resource stocks are always risky. However, it is a good sign when a company raises the dividend as this company has done recently. I am generally not a trader, so this really does not appeal to me. However, going by the current dividend testing, the stock price looks cheap.
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 6 times in the last 10 years this company had earnings losses. Then in 2021 they had EPS of $4.11 and in 2022, they had earnings of $2.60. Earnings are expected to be lower over the next 3 years at $1.74, $1.74, and $1.45 given after the second quarter and then changed to $0.77, $1.63, $2.01 after the third quarter.
If you had invested in this company in December 2012, for $1,015.74 you would have bought 27 shares at $37.62 per share. In December 2022, after 10 years you would have received $253.19 in dividends. The stock would be worth $260.82. Your total return would have been $514.01. This is a total return would be a total loss of 9.20% per year with 12.71% from capital loss and 3.51% from dividends.
| Cost | Tot. Cost | Shares | Years | Dividends | Stock Val | Tot Ret |
|---|---|---|---|---|---|---|
| $37.62 | $1,015.74 | 27 | 10 | $253.19 | $260.82 | $514.01 |
The current dividend yield is moderate with dividends growth restarting. The current dividend yield is moderate (2% to 4% ranges) at 4.17%. The 5 year dividend yield is low (below 2%) at 0.84%. The 10 year median dividend yield is moderate at 2.95%. The historical median dividend yield is high (7% and above) at 7.09%. Dividends were flat from 2010 to 2014 and then dividends were decreasing until 2021 and then they were increases in 2022 by 2833% year over year and in 2023 73% year over year.
This company was an income trust and it converted back to a corporation in 2009. These types of companies do have a tough time getting their dividend payments to the right level. The problem being that Income Trust companies and pay very high dividends and corporations cannot.
The Dividend Payout Ratios (DPR) are currently fine. The DPR for 2022 for Earnings per Share (EPS) is 10% with 5 year coverage not calculable because of earnings losses. The DPR for 2022 for Adjusted Earnings per Share (AEPS) is 15% with 5 year coverage at 23%. The DPR for 2022 for Adjusted Funds from Operations (AFFO) is 6% with 5 year coverage at 5%. The DPR for 2022 for Cash Flow per Share (CFPS) is 6% with 5 year coverage at 5%. The DPR for 2022 for Free Cash Flow (FCF) is 17% with 5 year coverage at 19%.
| Item | Cur | 5 Years |
|---|---|---|
| EPS | 9.81% | N/C |
| AEPS | 15.09% | 22.57% |
| AFFO | 5.63% | 4.69% |
| CFPS | 6.36% | 4.71% |
| FCF | 17.22% | 19.03% |
Debt Ratios are fine. The Long Term Debt/Market Cap Ratio for 2022 is good at 0.29 and currently at 0.48. The Liquidity Ratio for 2022 is low at 0.80 and 1.29 currently. If you add in Cash Flow after dividends, the result is a ratio of 2.45 and currently a ratio of 2.98, which are fine. The Debt Ratio for 2022 is good at 3.17 and currently at 2.23. The Leverage and Debt/Equity Ratios for 2022 are fine at 1.46 and 0.46 and are currently good at 1.82 and 0.82.
| Type | Year End | Ratio Curr |
|---|---|---|
| Lg Term R | 0.29 | 0.48 |
| Intang/GW | 0.04 | 0.04 |
| Liquidity | 0.80 | 1.29 |
| Liq. + CF | 2.45 | 2.98 |
| Liq. CF. DB | 4.34 | 4.28 |
| Debt Ratio | 3.17 | 2.23 |
| Leverage | 1.46 | 1.82 |
| D/E Ratio | 0.46 | 0.82 |
The Total Return per year is shown below for years of 5 to 21 to the end of 2022. 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 | -9.38% | 1.61% | 0.17% | 1.44% |
| 2012 | 10 | -22.35% | -9.20% | -12.71% | 3.51% |
| 2007 | 15 | -14.73% | 3.78% | -6.09% | 9.88% |
| 2002 | 20 | -5.77% | 18.30% | -0.52% | 18.82% |
| 2001 | 21 | 37.55% | 4.85% | 32.70% |
The 5-year low, median, and high median Price/Earnings per Share Ratios are negative and useless. The corresponding 10 year ratios are negative and useless. The corresponding historical ratios are 2.83, 5.09, and 7.35. These are low because of all the years of earnings losses. The current P/E Ratio is 12.45 based on a stock price of $9.59 and EPS estimate for 2023 of $0.77. A ratio of 12.45 is a reasonable one.
I also have Adjusted Earnings per Share (AEPS) data. The 5-year low, median, and high median Price/Adjusted Earnings per Share Ratios are 4.26, 6.71 and 8.83. The corresponding 10 year ratios are 12.95, 15.98 and 23.00. The current P/AEPS Ratio is 7.10 based on a stock price of $9.59 and 2023 AEPS estimate of $1.35. The current ratio is below the low ratio of the 10 year median ratios. This stock price testing suggests that the stock price is relatively cheap.
I also have Adjusted Funds from Operations (AFFO) data. The 5-year low, median, and high median Price/ Adjusted Funds from Operations Ratios are 1.18, 2.17 and 3.44. The corresponding 10 year ratios are 2.23, 2.90 and 3.73. The current P/AFFO Ratio is 2.29 based on a stock price of $9.59 and AFFO estimate for 2023 of $4.18. This ratio is between the low and median ratios of the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable and below the median.
I get a Graham Price of $17.74. The 10-year low, median, and high median Price/Graham Price Ratios are 0.53, 0.71 and 1.04. The current P/GP Ratio is 0.54 based on a stock price of $9.59. This ratio is between the low and median ratios of the 10 year median ratio. 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 0.79. The current P/B Ratio is 0.93 based on a Book Value of $5,710M, Book Value per Share of $10.37 and a stock price of $9.59. The current ratio is 17% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable but above the median. Any P/B Ratio below 1.50 is considered generally low.
I get a 10-year median Price/Cash Flow per Share Ratio of 2.94. The current P/CF Ratio is 2.25 based on Cash Flow per Share estimate for 2023 of $4.27, Cash Flow of $2,352M and a stock price of $9.59. The current ratio is 24% 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 7.09%. The current dividend yield is 4.17% based on dividends of $0.38 and a stock price of $9.59. The current dividend yield is 41% below the historical median dividend yield. This stock price testing suggests that the stock price is relatively expensive. The historical median dividend yield is high because this company used to be an income trust.
I get a 10 year median dividend yield of 2.95%. The current dividend yield is 4.17% based on dividends of $0.38 and a stock price of $9.59. The current dividend yield is 41% above the historical median dividend yield. This stock price testing suggests that the stock price is relatively cheap.
The 10-year median Price/Sales (Revenue) Ratio is 1.59. The current P/S Ratio is 1.33 based on Revenue estimate for 2023 of $3,958M, Revenue per Share of $7.18 and a stock price of $9.59. The current ratio is 16% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable and below the median.
Results of stock price testing is that the stock price is reasonable and may even be cheap. The dividend yield test we should look at here is the 10 year one because this company used to be an income trust which could have very high dividend yields. This test says the stock price is cheap. The P/S Ratio test says it is reasonable and below the median. The rest of the testing is saying the stock price is either reasonable or cheap.
When I look at analysts’ recommendations, I find Strong Buy (4), Buy (5). The consensus would be a Strong Buy. The 12 month stock price consensus is $14.11 with a high of $16.00 and low of $13.00. The consensus price implies a total return of 20.33% with 16.16% from capital gains and 4.17% from dividends. This is not a particularly high price considering the recommends is a Strong Buy.
Stock Chase. Stock Chase gives this stock 5 stars out of 5. It is not on any of the dividend lists I follow. Puja Tayal on Motley Fool thinks this is not the time to buy this stock. Jitendra Parashar on Motley Fool thinks you should buy and hold this stock for the long term. The company put out a Press Release about their 2022 results. The company put out a press release on Newswire about this third quarter of 2023 results.
Simply Wall Street via Yahoo Finance talks about this company buying Hammerhead and raising dividends. Simply Wall Street gives this stock 2 and one half stars out of 5. It gives 3 warnings of has a high level of debt; unstable dividend track record; and profit margins (7.1%) are lower than last year (52.6%).
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 10, 2023 around 5 pm. Tomorrow on my other blog I will write about Dividend Investing.... learn more on Thursday, November 09, 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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