Cenovus Energy Inc
NYSE:CVE
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Intrinsic Value
The intrinsic value of one CVE stock under the Base Case scenario is 25.02 USD. Compared to the current market price of 16.41 USD, Cenovus Energy Inc is Undervalued by 34%.
The Intrinsic Value is calculated as the average of DCF and Relative values:
Valuation Backtest
Cenovus Energy Inc
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Fundamental Analysis
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Cenovus Energy Inc. is a Canadian integrated oil company that has carved out a distinct position in the energy landscape by focusing on sustainable and efficient resource extraction. Founded in 2009 as a spin-off from Encana Corporation, Cenovus has thrived by developing vast oil sands reserves in Alberta, leveraging advanced technologies for extraction while maintaining a keen focus on reducing its environmental footprint. The company's dual strategy—operating both upstream (oil production) and downstream (refining and marketing)—provides a balanced approach that helps mitigate market volatility and optimize profitability throughout the oil supply chain. Cenovus’s commitment to responsible...
Cenovus Energy Inc. is a Canadian integrated oil company that has carved out a distinct position in the energy landscape by focusing on sustainable and efficient resource extraction. Founded in 2009 as a spin-off from Encana Corporation, Cenovus has thrived by developing vast oil sands reserves in Alberta, leveraging advanced technologies for extraction while maintaining a keen focus on reducing its environmental footprint. The company's dual strategy—operating both upstream (oil production) and downstream (refining and marketing)—provides a balanced approach that helps mitigate market volatility and optimize profitability throughout the oil supply chain. Cenovus’s commitment to responsible energy production, paired with its significant investment in renewable technologies, highlights its vision of transitioning toward a more sustainable future.
For investors, Cenovus presents a compelling opportunity in a sector often marred by unpredictability. The company's financial resilience is evidenced by its strong cash flow and disciplined capital allocation, allowing it to effectively navigate market fluctuations and invest in growth initiatives. Recent efforts to pay down debt and enhance shareholder returns through dividends and share buybacks signal a dedication to creating long-term value. As the world increasingly embraces cleaner energy solutions, Cenovus is positioned not just as a producer of hydrocarbons but as an emerging leader in the energy transition, balancing immediate demand with long-term sustainability goals. With a solid operational foundation, strong management team, and forward-looking strategies, Cenovus Energy Inc. stands out as an intriguing choice for investors seeking stability and growth in the evolving energy market.
Cenovus Energy Inc. is a Canadian integrated oil and natural gas company that primarily focuses on the exploration, production, and marketing of crude oil, natural gas, and natural gas liquids. As of the latest information available, Cenovus operates through several core business segments:
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Oil Sands: This segment is a key part of Cenovus's operations, focusing on the extraction and production of bitumen from oil sands deposits. The company utilizes both in-situ methods (like steam-assisted gravity drainage, or SAGD) and mining techniques to produce crude oil. Cenovus has significant oil sands reserves, primarily located in Alberta.
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Conventional Oil and Natural Gas: Cenovus engages in the exploration and production of conventional crude oil and natural gas. This segment includes various operations across Western Canada, providing a diversified portfolio that enhances the company's overall production capability.
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Refining and Marketing: Cenovus also has a refining segment, which processes crude oil into various refined products. The company owns a substantial refining capacity and markets refined products through multiple channels. This integration helps mitigate price volatility and provides stable revenue streams.
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Sustainable Development and Environmental Initiatives: As the industry faces increasing scrutiny regarding environmental impacts, Cenovus has a focus on sustainable development practices, including initiatives to reduce greenhouse gas emissions and improve energy efficiencies. This segment reflects the company's commitment to operating responsibly while addressing the needs of stakeholders.
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Midstream Operations: Cenovus may also participate in midstream activities such as transportation and storage of crude oil and natural gas. This can involve the use of pipelines and partnerships with other companies in the sector to ensure efficient movement of resources from production sites to markets.
These segments allow Cenovus Energy to capitalize on various aspects of the energy market while providing a balanced approach to production and refining. Therefore, it is well-positioned to respond to market dynamics and regulatory changes within the energy sector.
Cenovus Energy Inc. has several competitive advantages that distinguish it from its rivals in the oil and gas industry. Here are some key factors:
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Integrated Business Model: Cenovus operates across the entire value chain, from oil sands production to refining and marketing. This integration allows the company to capture more value from its operations and reduce exposure to price fluctuations in either upstream or downstream segments.
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Strong Asset Base: Cenovus possesses a significant portfolio of low-cost, long-life oil sands assets, particularly in Alberta, which are economically resilient even in low-price environments. Its capacity to leverage existing infrastructure also reduces capital expenditures relative to peers.
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Focus on Technology and Innovation: The company emphasizes improving recovery techniques and operational efficiencies, leveraging advanced technology to enhance production capabilities and reduce greenhouse gas emissions. This commitment to innovation can give Cenovus a competitive edge in terms of cost efficiency and sustainability.
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Strategic Partnerships: Cenovus has formed strategic alliances with other firms to share costs and risks in exploration and production activities. These partnerships enhance Cenovus's operational capabilities and financial flexibility.
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Strong Balance Sheet: Cenovus has worked to maintain a solid financial position, which allows it to weather economic downturns better than some competitors. A strong balance sheet also provides flexibility to invest in growth opportunities.
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Sustainability Initiatives: The company's focus on environmental responsibility and commitment to achieving net-zero greenhouse gas emissions by 2050 aligns with the growing importance of ESG (Environmental, Social, and Governance) factors in investment decisions. This focus can attract environmentally conscious investors and customers.
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Experienced Management Team: Cenovus benefits from a management team with extensive industry experience and a clear strategic vision. Their ability to navigate challenges and capitalize on opportunities is crucial for maintaining competitive advantages.
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Diverse Production Base: Along with its oil sands operations, Cenovus has diversified its production portfolio, including natural gas and refining operations. This diversification helps mitigate risks associated with reliance on a single commodity.
By leveraging these advantages, Cenovus Energy Inc. can position itself favorably in a highly competitive and volatile industry landscape.
Cenovus Energy Inc., like other companies in the oil and gas sector, faces several risks and challenges:
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Commodity Price Volatility: The company's revenue is heavily dependent on oil and gas prices, which are subject to fluctuations due to market dynamics, geopolitical tensions, and changes in supply and demand. A significant drop in prices can impact profitability.
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Regulatory Environment: Changes in government policies or regulations, particularly concerning environmental standards, carbon pricing, and emissions reductions, could increase operational costs or limit production capabilities.
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Environmental and Social Risks: There is increasing scrutiny on the oil and gas industry regarding its environmental impact and sustainability practices. Negative public perception and pressure from stakeholders for cleaner energy solutions could pose challenges.
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Operational Risks: Oil sands extraction and processing are capital and resource-intensive. Cenovus faces risks related to operational efficiency, technological failures, and potential accidents, which can lead to costly Downtime or environmental incidents.
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Economic Conditions: Global and regional economic slowdowns can lead to reduced energy demand, affecting Cenovus's sales and revenue.
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Competition: The energy sector is competitive, with numerous players vying for market share. Cenovus has to continually innovate and improve efficiencies to remain competitive.
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Debt Levels: While Cenovus has made efforts to reduce debt, high levels of leverage can be risky, especially in a fluctuating commodity price environment.
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Talent Management: Attracting and retaining skilled labor, particularly in specialized fields related to energy extraction and environmental management, is crucial for continued success.
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Technological Disruption: The rise of renewable energy sources and advancements in alternative energy technologies might challenge traditional oil and gas models. This shift necessitates strategic adaptation.
By monitoring these risks and implementing mitigation strategies, Cenovus can better navigate the challenges ahead.
Revenue & Expenses Breakdown
Cenovus Energy Inc
Balance Sheet Decomposition
Cenovus Energy Inc
Current Assets | 11.6B |
Cash & Short-Term Investments | 3.2B |
Receivables | 3.9B |
Other Current Assets | 4.6B |
Non-Current Assets | 44.4B |
Long-Term Investments | 418m |
PP&E | 39.7B |
Intangibles | 2.9B |
Other Non-Current Assets | 1.3B |
Current Liabilities | 7B |
Accounts Payable | 6.5B |
Short-Term Debt | 137m |
Other Current Liabilities | 410m |
Non-Current Liabilities | 19B |
Long-Term Debt | 9.6B |
Other Non-Current Liabilities | 9.4B |
Earnings Waterfall
Cenovus Energy Inc
Revenue
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56B
CAD
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Cost of Revenue
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-31.9B
CAD
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Gross Profit
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24.1B
CAD
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Operating Expenses
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-17B
CAD
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Operating Income
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7B
CAD
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Other Expenses
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-2.3B
CAD
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Net Income
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4.7B
CAD
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Free Cash Flow Analysis
Cenovus Energy Inc
CAD | |
Free Cash Flow | CAD |
Cenovus Energy reported a stellar Q2, hitting their $4 billion net debt target, enabling 100% of excess free funds flow to shareholders. They produced over 800,000 BOE/day, with oil sands contributing around 610,000 barrels/day, boosting operating margins by $500 million to $2.7 billion. Despite some planned maintenance impacting Q3 production, projected upstream production for 2024 has increased to a range of 785,000–810,000 BOE/day. Capital expenditure guidance remains at $4.5–$5 billion, with major projects like Narrows Lake and Foster Creek progressing on schedule for completion by 2026.
What is Earnings Call?
CVE Profitability Score
Profitability Due Diligence
Cenovus Energy Inc's profitability score is 60/100. The higher the profitability score, the more profitable the company is.
Score
Cenovus Energy Inc's profitability score is 60/100. The higher the profitability score, the more profitable the company is.
CVE Solvency Score
Solvency Due Diligence
Cenovus Energy Inc's solvency score is 56/100. The higher the solvency score, the more solvent the company is.
Score
Cenovus Energy Inc's solvency score is 56/100. The higher the solvency score, the more solvent the company is.
Wall St
Price Targets
CVE Price Targets Summary
Cenovus Energy Inc
According to Wall Street analysts, the average 1-year price target for CVE is 25.59 USD with a low forecast of 22.42 USD and a high forecast of 29.53 USD.
Shareholder Yield
Current shareholder yield for CVE is .
Shareholder yield represents the total return a company provides to its shareholders, calculated as the sum of dividend yield, buyback yield, and debt paydown yield. What is shareholder yield?
CVE Price
Cenovus Energy Inc
Average Annual Return | 27.93% |
Standard Deviation of Annual Returns | 62.62% |
Max Drawdown | -85% |
Market Capitalization | 30.5B USD |
Shares Outstanding | 1 878 300 000 |
Percentage of Shares Shorted | 0.75% |
Profile
Country
Industry
Market Cap
Dividend Yield
Description
Cenovus Energy, Inc. engages in provision of gas and oil. The company is headquartered in Calgary, Alberta and currently employs 5,938 full-time employees. The company went IPO on 2009-11-02. The firm's segments include Upstream, Downstream, and Corporate and Eliminations. The Upstream segment includes Oil Sands, Conventional, and Offshore. The Downstream Segment includes Canadian Manufacturing, United States Manufacturing, and Retail. The firm's upstream operations include oil sands projects in northern Alberta, thermal and conventional crude oil, natural gas and natural gas liquids (NGLs) projects across Western Canada, crude oil production offshore Newfoundland and Labrador and natural gas and NGLs production offshore China and Indonesia. Its downstream operations include upgrading, refining and retail operations in Canada and the United States.
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Officers
The intrinsic value of one CVE stock under the Base Case scenario is 25.02 USD.
Compared to the current market price of 16.41 USD, Cenovus Energy Inc is Undervalued by 34%.