Stock of the Day

March 30, 2021

Cenovus Energy (CVE)

$14.61
-$0.69 (-4.5%)
Market Cap: $27.89B

About Cenovus Energy

Cenovus Energy Inc., together with its subsidiaries, develops, produces, refines, transports, and markets crude oil, natural gas, and refined petroleum products in Canada and internationally. The company operates through Oil Sands, Conventional, Offshore, Canadian Refining, and U.S. Refining segments. The Oil Sands segment develops and produces bitumen and heavy oil in northern Alberta and Saskatchewan. This segment assets include Foster Creek, Christina Lake, and Sunrise projects, as well as Lloydminster thermal and conventional heavy oil assets. The Conventional segment holds natural gas liquids and natural gas assets primarily located in Elmworth-Wapiti, Kaybob-Edson, Clearwater, and Rainbow Lake operating in Alberta and British Columbia, as well as interests in various natural gas processing facilities. The offshore segment engages in offshore operation, exploration, and development activities in China and the East Coast of Canada. The Canadian Refining segment owns and operates Lloydminster upgrading and asphalt refining complex, which converts heavy oil and bitumen into synthetic crude oil, diesel, asphalt, and other ancillary products, as well as Bruderheim crude-by-rail terminal and ethanol plants. The U.S. Refining segment refines crude oil to produce gasoline, diesel, jet fuel, asphalt, and other products. Cenovus Energy Inc. is headquartered in Calgary, Canada.

Cenovus Energy Bull Case

Here are some ways that investors could benefit from investing in Cenovus Energy Inc.:

  • The company recently reported earnings per share (EPS) of $0.42, exceeding the consensus estimate of $0.34, indicating strong financial performance.
  • Cenovus Energy Inc. has a market capitalization of approximately $27.15 billion, suggesting it is a significant player in the oil and gas sector, which can provide stability to investors.
  • The stock is currently trading at $15.06, which is near its 52-week low of $14.20, potentially offering a buying opportunity for investors looking for value.
  • The company has increased its quarterly dividend to $0.133 per share, reflecting a commitment to returning value to shareholders, with an annualized yield of 3.58%.
  • Analysts have a consensus target price of $30.00 for the stock, indicating potential upside from the current trading price, which could attract growth-oriented investors.

Cenovus Energy Bear Case

Investors should be bearish about investing in Cenovus Energy Inc. for these reasons:

  • The company's revenue for the latest quarter was down 17.9% year-over-year, which may raise concerns about its growth trajectory and market conditions.
  • Cenovus Energy Inc. has a relatively high beta of 2.01, indicating that its stock price is more volatile than the market, which could pose risks for conservative investors.
  • Despite the recent dividend increase, the payout ratio stands at 35.17%, which, while manageable, may limit future dividend growth if earnings do not improve.
  • Recent analyst downgrades, including a shift from "strong-buy" to "hold," suggest that some market experts are cautious about the stock's near-term performance.
  • The company operates in a highly competitive and fluctuating industry, which can be affected by changes in oil prices and regulatory environments, adding uncertainty for investors.

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