Is it a good company at a reasonable price? This is an energy stock and so it is risky. If you look at a chart for this stock, its price is relatively high compared to the past. Money Sense just added this stock to its dividend list this year. Analysts seem to think that will do well in the future. My testing is showing that the stock price is probably reasonable, and the dividend yield testing is showing it is cheap.
I do not own this stock of Cenovus Energy Inc (TSX-CVE, NYSE-CVE) I do not own this stock of Cenovus Energy but I used to. I had held this stock previously as Alberta Energy Company from April 2000 until August 2002 and made some 18% total returns per year.
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 that this company is doing better this year that last year. Last year Revenue was down 23%, but it is up 11% so far this year. EPS was down by 34% in 2023, but are up by 18% so far this year. Cash Flow was down in 2023 by 35%, but is up by 41% so far this year.
If you had invested in this company in December 2013, for $1,003.20 you would have bought 33 shares at $30.40 per share. In December 2023, after 10 years you would have received $159.61 in dividends. The stock would be worth $884.40. Your total return would have been $1,044.01. This would be a total return of 0.09% per year with 1.25% from capital loss and 1.35% from dividends.
| Cost | Tot. Cost | Shares | Years | Dividends | Stock Val | Tot Ret |
|---|---|---|---|---|---|---|
| $30.40 | $1,003.20 | 33 | 11 | $159.61 | $884.40 | $1,044.01 |
The current dividend yield is moderate with dividend growth currently high after a dividend cut. The current dividend yield is moderate (2% to 4% ranges) at 3.14%. The 5, 10 and historical dividend yields are low (below 2%) at 1.48%, 1.60% and 1.47%. The dividend growth over the past 5 years is good at 21.3% per year. However, dividends were cut in 2015 by 81%, and are still some 32% below the dividends given in 2014. The last dividend increase was in 2024 and it was for 28.6%. It was recently put on the Money Sense Dividend list. I have data for the past 31 years and dividends have gone up 14 times and down 6 times over this period.
The Dividend Payout Ratios (DPR) are good. The DPR for 2023 for Earnings per Share (EPS) is good at 25% with 5 year coverage at 25%. The DPR for 2023 for Funds from Operations (FFO) is good at 22% with 5 year coverage at 7%. The DPR for 2023 for Cash Flow per Share (CFPS) is good at 11% with 5 year coverage at 8%. The DPR for 2023 for Free Cash Flow (FCF) is good at 28% with 5 year coverage at 15%. But here again, there is no agreement on FCF.
| Item | Cur | 5 Years |
|---|---|---|
| EPS | 24.76% | 24.89% |
| FFO | 22.44% | 7.15% |
| CFPS | 11.36% | 7.93% |
| FCF | 28.39% | 14.55% |
Debt Ratios are good. The Long Term Debt/Market Cap Ratio for 2023 is good at 0.12 and currently at 0.17. The Liquidity Ratio for 2023 is good at 1.56 and 1.66 currently. The Debt Ratio for 2023 is good at 2.14 and 2.16 currently. The Leverage and Debt/Equity Ratios for 2023 are good at 1.88 and 0.88 and currently at 1.87 and 0.87.
| Type | Year End | Ratio Curr |
|---|---|---|
| Lg Term R | 0.12 | 0.17 |
| Intang/GW | 0.06 | 0.07 |
| Liquidity | 1.56 | 1.66 |
| Liq. + CF | 2.59 | 2.76 |
| Debt Ratio | 2.14 | 2.16 |
| Leverage | 1.88 | 1.87 |
| D/E Ratio | 0.88 | 0.87 |
The Total Return per year is shown below for years of 5 to 31 to the end of 2023 in CDN$. 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. |
|---|---|---|---|---|---|
| 2018 | 5 | 21.29% | 24.46% | 22.79% | 1.67% |
| 2013 | 10 | -5.93% | 0.09% | -1.25% | 1.35% |
| 2008 | 15 | -3.88% | 1.87% | -0.21% | 2.08% |
| 2003 | 20 | 7.42% | 6.94% | 3.90% | 3.03% |
| 1998 | 25 | 8.65% | 10.10% | 6.59% | 3.51% |
| 1993 | 30 | 7.64% | 10.99% | 7.51% | 3.48% |
| 1992 | 31 | 7.38% | 11.22% | 7.71% | 3.51% |
The Total Return per year is shown below for years of 5 to 18 to the end of 2023 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. |
|---|---|---|---|---|---|
| 2018 | 5 | 22.04% | 20.68% | 18.82% | 1.86% |
| 2013 | 10 | -7.96% | -3.99% | -5.28% | 1.29% |
| 2008 | 15 | -4.38% | 0.46% | -2.01% | 2.47% |
| 2005 | 18 | 7.29% | 1.05% | -1.52% | 2.57% |
The 5-year low, median, and high median Price/Earnings per Share Ratios are 5.64, 7.38 and 9.67. The corresponding 10 year ratios are 5.36, 7.07 and 8.77. The corresponding historical ratios are 12.09, 14.37 and 16.52. The current ratio is 10.31 based on a stock price of $22.93 and EPS for 2024 of $2.22. The current ratio is above the high ratio of the 10 year median ratio. This stock price testing suggests that the stock price is relatively expensive. However, normally a P/E Ratio is 10.31 is considered a low ratio.
I also have Adjusted Funds from Operations (AFFO) data. The 5-year low, median, and high median Price/ Adjusted Funds from Operations Ratios are 3.34, 4.32 and 5.66. The corresponding 10 year ratios are 4.36, 5.73 and 7.65. The current P/AFFO is 4.67 based on a stock price of $22.93 and AFFO estimate for 2024 of $4.91. 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.
I also have Funds from Operations (FFO) data. The 5-year low, median, and high median Price/ Funds from Operations Ratios are 4.49, 5.93 and 7.11. The corresponding 10 year ratios are 4.72, 6.22 and 8.14. The current P/FFO is 9.76 based on a stock price of $22.93 and FFO estimate for 2024 of $2.35. The current ratio is above the high ratio for the 10 year median ratio. This stock price testing suggests that the stock price is relatively expensive.
I get a Graham Price of $28.32. The 10-year low, median, and high median Price/Graham Price Ratios are 0.51, 0.80 and 1.02. The current P/GP Ratio is 0.81 based on a stock price of $22.93. The current ratio is between the median and high ratio 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 1.43 based on a stock price of $22.93, Book Value of $30.012M and Book Value per Share of $16.03. The current ratio is 22% 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 2024 of $16.44. This implies a P/B Ratio of 1.39 and a Book Value of $30,774M. This ratio is 19% 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 6.11. The current P/CF Ratio is 4.74 based on Cash Flow per Share estimate for 2024 of $4.84, Cash Flow of $9,054 and a stock price of $22.93. The current 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 1.47%. The current dividend yield is 3.14% based on dividends of $0.72 and stock price of $22.93. The current yield is 114% above the historical median dividend yield. This stock price testing suggests that the stock price is relatively cheap.
I get an historical median dividend yield of 1.60%. The current dividend yield is 3.14% based on dividends of $0.72 and stock price of $22.93. The current yield is 97% 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 0.81. The current ratio is 0.74 based on Revenue estimate for 2024 of $58,050M, Revenue per Share of $31.01 and a stock price of $22.93. The current ratio is 9% 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 probably reasonable and could be cheap. The dividend yield testing is saying that the stock price is relatively cheap. The P/S Ratio testing is saying that the stock price is reasonable and below the median. The rest of the testing is mixed with results from cheap to expensive.
When I look at analysts’ recommendations, I find Strong Buy (10), Buy (10). The consensus would be a Strong Buy. The 12 month stock price consensus is $31.75 with a high of $38.00 and low of $29.00. The consensus of $31.75 implies a total return of 41.60% with 38.46% from capital gains and 3.14% from dividends based on a current stock price of $22.93.
There is lots of coverage on Stock Chase for this stock. Most recommendations are buys, but there are a few that say that they like other companies better. Stock Chase gives this stock 5 stars out of 5. Aditya RaghunathMotley Fool reviews this stock. He thinks it is cheap, but this stock has always underperformed the market. Chris MacDonald on Motley Fool reviews this stock. Her thinks it is currently a buy. The company put out a Press Release on its fourth quarter for 2023. The company put out a Press Release about its second quarter of 2024.
Insider Money via Yahoo Finance put out a report on this stock and said it was a profitable Value stock to invest in. Simply Wall Street via Yahoo Finance talks about who owns this company. It says that institutions own more than half the company. Simply Wall Street has two warnings on this company of earnings are forecast to decline by an average of 1.2% per year for the next 3 years; and unstable dividend track record. Simply Wall Street gives this stock 4 stars out of 5.
Cenovus Energy Inc 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. The company had upstream projects across Western Canada; crude oil production and natural gas and NGLs production offshore China and Indonesia. The downstream operations include upgrading and refining operations in Canada and the U.S., and commercial fuel operations across Canada. 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 1, 2024 around 5 pm. Tomorrow on my other blog I will write about Annuities .... learn more on Thursday, October 30, 2024 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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