Cenovus Energy Inc. (NYSE: CVE)

Sector: Energy Industry: Oil & Gas Integrated CIK: 0001475260
Market Cap 38.97 Bn
P/B 1.90
P/E 17.12
P/S 1.04
ROIC (Qtr) 15.06
Div Yield % 2.09
Rev 1y % (Qtr) -5.90
Total Debt (Qtr) 7.27 Bn
Debt/Equity (Qtr) 0.35
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About

Investment thesis

Bull case

  • Strong operating cash flow of 5.69B provides robust 0.78x coverage of total debt 7.27B, indicating excellent debt servicing capability and financial flexibility.
  • Healthy cash reserves of 1.56B provide 6.31x coverage of short-term debt 247.83M, demonstrating strong liquidity position and minimal refinancing risk.
  • Operating cash flow of 5.69B provides exceptional 14.98x coverage of interest expenses 379.71M, showing strong debt service capability.
  • Operating cash flow of 5.69B provides strong 85.32x coverage of stock compensation 66.67M, indicating sustainable incentive practices.
  • Strong tangible asset base of 36.70B provides 5.05x coverage of total debt 7.27B, indicating robust asset backing and low credit risk.

Bear case

  • Operating cash flow of 5.69B barely covers its investment activities of (4.02B), with a coverage ratio of -1.41, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • Operating cash flow of 5.69B provides thin coverage of dividend payments of (1.02B) with a -5.59 ratio, suggesting potential dividend sustainability issues if operational performance deteriorates.
  • Cash reserves of 1.56B provide limited coverage of acquisition spending of (164.49M), which is -9.50x, suggesting aggressive expansion might strain liquidity if market conditions deteriorate.
  • Free cash flow of 2.05B represents just -22.24x of debt issuance (92.03M), suggesting concerning reliance on leverage rather than internal cash generation for growth.
  • Operating earnings of 3.01B show weak coverage of depreciation charges of 3.66B, with a 0.82 ratio indicating high capital intensity and potential reinvestment needs.

Product and Service Breakdown of Revenue (2024)

Peer comparison

Companies in the Oil & Gas Integrated
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 XOM Exxon Mobil Corp 630.73 Bn 18.39 1.45 42.04 Bn
2 CVX Chevron Corp 360.16 Bn 29.26 2.14 41.54 Bn
3 TTE TotalEnergies SE 172.29 Bn 13.13 0.94 61.42 Bn
4 IMO Imperial Oil Ltd 99.73 Bn 51.19 4.54 2.90 Bn
5 BP Bp Plc 98.37 Bn 1,788.57 0.51 72.53 Bn
6 SU Suncor Energy Inc 67.22 Bn 15.56 1.87 10.59 Bn
7 CVE Cenovus Energy Inc. 38.97 Bn 17.12 1.04 7.27 Bn
8 NFG National Fuel Gas Co 7.90 Bn 12.06 3.32 2.77 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 0.89 1.02
EV to Cash from Ops. EV/CFO 6.08 11.79
EV to Debt EV to Debt 4.76 7.40
EV to EBIT EV/EBIT 11.50 19.95
EV to EBITDA EV/EBITDA 5.09 7.85
EV to Free Cash Flow [EV/FCF] EV/FCF 16.90 46.96
EV to Market Cap EV to Market Cap 0.89 1.30
EV to Revenue EV/Rev 0.92 2.01
Price to Book Value [P/B] P/B 1.90 2.14
Price to Earnings [P/E] P/E 17.12 168.60
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Div Coverage (Qtr) 1.62 0.95
Dividend Payout Ratio % Div Payout % (Qtr) 35.50 786.52
Dividend per Basic Share Div per Share (Qtr) 0.45 1.89
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 28.58 37.80
Interest Coverage Int. cover (Qtr) 7.92 42.88
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) -5.21 -10.32
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) -36.20 32.58
Dividend Growth (1y) % Div 1y % (Qtr) -39.43 -4.88
EBIAT Growth (1y) % EBIAT 1y % (Qtr) -14.68 142.66
EBITDA Growth (1y) % EBITDA 1y % (Qtr) -8.37 22.56
EBIT Growth (1y) % EBIT 1y % (Qtr) -24.24 35.32
EBT Growth (1y) % EBT 1y % (Qtr) -26.47 190.68
EPS Growth (1y) % EPS 1y % (Qtr) -13.39 511.78
FCF Growth (1y) % FCF 1y % (Qtr) -48.89 4.66
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) -7.80 16.28
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 0.70 0.58
Cash Payout Ratio Cash Payout (Qtr) 0.11 0.13
Cash Ratio Cash Ratio (Qtr) 0.38 0.27
Current Ratio Curr Ratio (Qtr) 1.73 1.06
Debt to Equity Ratio Debt/Equity (Qtr) 0.35 0.88
Interest Cover Ratio Int Coverage (Qtr) 7.92 42.88
Times Interest Earned Times Interest Earned (Qtr) 7.92 42.88
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 17.80 18.39
EBIT Margin % EBIT Margin % (Qtr) 11.10 6.19
EBT Margin % EBT Margin % (Qtr) 7.03 1.30
Gross Margin % Gross Margin % (Qtr) 19.70 30.31
Net Profit Margin % Net Margin % (Qtr) 6.10 -1.26