Is Weakness In Cenovus Energy Inc. (TSE:CVE) Stock A Sign That The Market Could be Wrong Given Its Strong Financial Prospects?

Simply Wall St.11-23 20:54

Cenovus Energy (TSE:CVE) has had a rough three months with its share price down 12%. But if you pay close attention, you might gather that its strong financials could mean that the stock could ...

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(TSE:CVE) Stock A Sign That The Market Could be Wrong Given Its Strong Financial Prospects?\n</h2>\n\n<h4 class=\"meta\">\n\n\n2024-11-23 20:54 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://finance.yahoo.com/news/weakness-cenovus-energy-inc-tse-125427045.html><strong>Simply Wall St.</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>Cenovus Energy (TSE:CVE) has had a rough three months with its share price down 12%. But if you pay close attention, you might gather that its strong financials could mean that the stock could ...</p>\n\n<a href=\"https://finance.yahoo.com/news/weakness-cenovus-energy-inc-tse-125427045.html\">Source Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","isBrief":false,"type":0,"news_type":1,"symbol":"CVE","symbol_name":"Cenovus能源","start_time":0,"source_url":"https://finance.yahoo.com/news/weakness-cenovus-energy-inc-tse-125427045.html","article_id":"2485741205","we_media_id":null,"thumbnails":["https://s.yimg.com/uu/api/res/1.2/VUxoyzpXa.XJhKBzwtZ.wg--~B/aD00MzI7dz0xMTk0O2FwcGlkPXl0YWNoeW9u/https://media.zenfs.com/en/simply_wall_st__316/5a12595fe0f9b8e2072084c2db6835b6"],"rights":null,"url":"https://stock-news.laohu8.com/highlight/detail?id=2485741205","pubTimestamp":1732366467,"sourceInfo":{"source_id":"yahoofinance","name":"雅虎金融"},"weMediaInfo":null,"summary":"Cenovus Energy  has had a rough three months with its share price down 12%. But if you pay close attention, you might gather that its strong financials could mean that the stock could potentially see an increase in value in the long-term, given how markets usually reward companies with good financial health. Particularly, we will be paying attention to Cenovus Energy's  ROE today.Return on equity or ROE is an important factor to be considered by a shareholder because it tells them how effectively their capital is being reinvested. In other words, it is a profitability ratio which measures the rate of return on the capital provided by the company's shareholders.","collect":0,"end_time":0,"defaultTopTitle":"yahoo.com","property":[],"viewcount":null,"language":"en","relate_stocks":{"CVE":"Cenovus能源","BK4566":"资本集团","TSE":"Trinseo","BK4201":"综合性石油与天然气企业","BK4585":"ETF&股票定投概念","BK4090":"商品化工","CNVEF":"Cenovus Energy Inc.","BK4588":"碎股"},"translate_title":"Cenovus Energy Inc.(TSE：CVE)股票的疲软是否表明鉴于其强劲的财务前景，市场可能是错误的？","themeId":null,"isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"CNVEF":1,"TSE":1,"CVE":0.9},"content_text":"Cenovus Energy (TSE:CVE) has had a rough three months with its share price down 12%. But if you pay close attention, you might gather that its strong financials could mean that the stock could potentially see an increase in value in the long-term, given how markets usually reward companies with good financial health. Particularly, we will be paying attention to Cenovus Energy's  ROE today. \n Return on equity or ROE is an important factor to be considered by a shareholder because it tells them how effectively their capital is being reinvested. In other words, it is a profitability ratio which measures the rate of return on the capital provided by the company's shareholders. \n Check out our latest analysis for Cenovus Energy \n How To Calculate Return On Equity? \n Return on equity can be calculated by using the formula: \n Return on Equity = Net Profit (from continuing operations) ÷ Shareholders' Equity \nSo, based on the above formula, the ROE for Cenovus Energy is:\n13% = CA$3.7b ÷ CA$30b (Based on the trailing twelve months to September 2024).\n The 'return' is the yearly profit. That means that for every CA$1 worth of shareholders' equity, the company generated CA$0.13 in profit. \n What Has ROE Got To Do With Earnings Growth? \n So far, we've learned that ROE is a measure of a company's profitability. Based on how much of its profits the company chooses to reinvest or \"retain\", we are then able to evaluate a company's future ability to generate profits. Assuming everything else remains unchanged, the higher the ROE and profit retention, the higher the growth rate of a company compared to companies that don't necessarily bear these characteristics. \n Cenovus Energy's Earnings Growth And 13% ROE \n To begin with, Cenovus Energy seems to have a respectable ROE. Further, the company's ROE is similar to the industry average of 11%. Consequently, this likely laid the ground for the impressive net income growth of 46% seen over the past five years by Cenovus Energy. We reckon that there could also be other factors at play here. For instance, the company has a low payout ratio or is being managed efficiently. \n Next, on comparing with the industry net income growth, we found that Cenovus Energy's growth is quite high when compared to the industry average growth of 38% in the same period, which is great to see. \n\n\n\n  TSX:CVE Past Earnings Growth November 23rd 2024\n \n\n The basis for attaching value to a company is, to a great extent, tied to its earnings growth. What investors need to determine next is if the expected earnings growth, or the lack of it, is already built into the share price. Doing so will help them establish if the stock's future looks promising or ominous. One good indicator of expected earnings growth is the P/E ratio which determines the price the market is willing to pay for a stock based on its earnings prospects. So, you may want to check if Cenovus Energy is trading on a high P/E or a low P/E, relative to its industry. \n Is Cenovus Energy Making Efficient Use Of Its Profits? \n Cenovus Energy's ' three-year median payout ratio is on the lower side at 23% implying that it is retaining a higher percentage (77%) of its profits. So it looks like Cenovus Energy is reinvesting profits heavily to grow its business, which shows in its earnings growth. \n Additionally, Cenovus Energy has paid dividends over a period of at least ten years which means that the company is pretty serious about sharing its profits with shareholders. Looking at the current analyst consensus data, we can see that the company's future payout ratio is expected to rise to 34% over the next three years. Regardless, the ROE is not expected to change much for the company despite the higher expected payout ratio. \n Conclusion \n In total, we are pretty happy with Cenovus Energy's performance. In particular, it's great to see that the company is investing heavily into its business and along with a high rate of return, that has resulted in a sizeable growth in its earnings. With that said, the latest industry analyst forecasts reveal that the company's earnings growth is expected to slow down. To know more about the company's future earnings growth forecasts take a look at this free report on analyst forecasts for the company to find out more. \nHave feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.","kind":"highlight","is_publish_news":true,"is_publish_highlight":false,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"1","news_tag":"","news_rank":0,"symbols":[],"gpt_button":1},"commentList":[],"isCommentEnd":true,"newsSizeData":{"likeSize":0,"commentSize":0,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":true,"deviceId":"web-server-community-laohu8-v3","version":"4.29.3","shortVersion":"4.29.3","platform":"web","vendor":"web","appName":"ttm","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/2485741205"}