Intrinsic value of Cenovus Energy - CVE

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$6.92

  Intrinsic Value

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  Value-price divergence*

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$6.92

 
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*Intrinsic value change (in %) minus stock price change (in %) in the past 12 months.

We calculate the intrinsic value of CVE stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 2016), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 5.5

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2016(a)
   2017
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  -7.12
  24.60
  22.64
  20.88
  19.29
  17.86
  16.57
  15.42
  14.37
  13.44
  12.59
  11.83
  11.15
  10.54
  9.98
  9.48
  9.04
  8.63
  8.27
  7.94
  7.65
  7.38
  7.14
  6.93
  6.74
  6.56
  6.41
  6.27
  6.14
  6.03
  5.92
Revenue, $m
  8,981
  15,119
  18,542
  22,413
  26,736
  31,511
  36,733
  42,396
  48,490
  55,006
  61,933
  69,262
  76,985
  85,096
  93,591
  102,467
  111,725
  121,369
  131,405
  141,841
  152,688
  163,961
  175,676
  187,850
  200,506
  213,666
  227,356
  241,603
  256,436
  271,889
  287,993
Variable operating expenses, $m
 
  13,299
  16,304
  19,703
  23,498
  27,691
  32,276
  37,248
  42,599
  48,320
  54,402
  60,813
  67,594
  74,715
  82,173
  89,966
  98,095
  106,563
  115,374
  124,537
  134,061
  143,959
  154,244
  164,933
  176,045
  187,600
  199,620
  212,128
  225,153
  238,720
  252,860
Fixed operating expenses, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total operating expenses, $m
  9,234
  13,299
  16,304
  19,703
  23,498
  27,691
  32,276
  37,248
  42,599
  48,320
  54,402
  60,813
  67,594
  74,715
  82,173
  89,966
  98,095
  106,563
  115,374
  124,537
  134,061
  143,959
  154,244
  164,933
  176,045
  187,600
  199,620
  212,128
  225,153
  238,720
  252,860
Operating income, $m
  -253
  1,820
  2,238
  2,710
  3,237
  3,820
  4,457
  5,148
  5,891
  6,686
  7,531
  8,450
  9,392
  10,381
  11,418
  12,500
  13,630
  14,806
  16,031
  17,304
  18,627
  20,002
  21,431
  22,917
  24,461
  26,066
  27,736
  29,474
  31,284
  33,169
  35,134
EBITDA, $m
  856
  3,689
  4,524
  5,469
  6,524
  7,689
  8,963
  10,345
  11,832
  13,422
  15,112
  16,901
  18,785
  20,765
  22,837
  25,003
  27,262
  29,616
  32,064
  34,611
  37,258
  40,008
  42,867
  45,838
  48,926
  52,137
  55,477
  58,954
  62,574
  66,344
  70,274
Interest expense (income), $m
  0
  222
  340
  475
  628
  799
  987
  1,193
  1,417
  1,657
  1,915
  2,188
  2,477
  2,782
  3,103
  3,438
  3,788
  4,154
  4,534
  4,931
  5,343
  5,771
  6,216
  6,678
  7,159
  7,658
  8,178
  8,718
  9,281
  9,866
  10,476
Earnings before tax, $m
  -686
  1,599
  1,898
  2,235
  2,609
  3,021
  3,470
  3,955
  4,474
  5,029
  5,617
  6,261
  6,914
  7,599
  8,315
  9,063
  9,842
  10,653
  11,496
  12,373
  13,285
  14,232
  15,216
  16,238
  17,302
  18,408
  19,558
  20,756
  22,003
  23,303
  24,657
Tax expense, $m
  -283
  432
  512
  603
  705
  816
  937
  1,068
  1,208
  1,358
  1,516
  1,691
  1,867
  2,052
  2,245
  2,447
  2,657
  2,876
  3,104
  3,341
  3,587
  3,843
  4,108
  4,384
  4,671
  4,970
  5,281
  5,604
  5,941
  6,292
  6,657
Net income, $m
  -403
  1,167
  1,385
  1,631
  1,905
  2,206
  2,533
  2,887
  3,266
  3,671
  4,100
  4,571
  5,047
  5,547
  6,070
  6,616
  7,184
  7,776
  8,392
  9,032
  9,698
  10,389
  11,107
  11,854
  12,630
  13,438
  14,277
  15,152
  16,062
  17,011
  18,000

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  2,753
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  18,695
  26,854
  32,934
  39,809
  47,488
  55,969
  65,245
  75,304
  86,128
  97,701
  110,005
  123,024
  136,742
  151,148
  166,236
  182,001
  198,446
  215,576
  233,401
  251,938
  271,205
  291,228
  312,035
  333,659
  356,138
  379,513
  403,829
  429,134
  455,482
  482,928
  511,533
Adjusted assets (=assets-cash), $m
  15,942
  26,854
  32,934
  39,809
  47,488
  55,969
  65,245
  75,304
  86,128
  97,701
  110,005
  123,024
  136,742
  151,148
  166,236
  182,001
  198,446
  215,576
  233,401
  251,938
  271,205
  291,228
  312,035
  333,659
  356,138
  379,513
  403,829
  429,134
  455,482
  482,928
  511,533
Revenue / Adjusted assets
  0.563
  0.563
  0.563
  0.563
  0.563
  0.563
  0.563
  0.563
  0.563
  0.563
  0.563
  0.563
  0.563
  0.563
  0.563
  0.563
  0.563
  0.563
  0.563
  0.563
  0.563
  0.563
  0.563
  0.563
  0.563
  0.563
  0.563
  0.563
  0.563
  0.563
  0.563
Average production assets, $m
  12,494
  21,030
  25,792
  31,176
  37,189
  43,831
  51,096
  58,973
  67,450
  76,513
  86,149
  96,344
  107,087
  118,369
  130,185
  142,531
  155,410
  168,824
  182,784
  197,301
  212,389
  228,070
  244,365
  261,300
  278,904
  297,209
  316,252
  336,069
  356,703
  378,197
  400,598
Working capital, $m
  3,072
  544
  668
  807
  962
  1,134
  1,322
  1,526
  1,746
  1,980
  2,230
  2,493
  2,771
  3,063
  3,369
  3,689
  4,022
  4,369
  4,731
  5,106
  5,497
  5,903
  6,324
  6,763
  7,218
  7,692
  8,185
  8,698
  9,232
  9,788
  10,368
Total debt, $m
  4,687
  9,716
  13,577
  17,943
  22,819
  28,204
  34,095
  40,482
  47,355
  54,704
  62,517
  70,784
  79,495
  88,643
  98,224
  108,235
  118,677
  129,555
  140,874
  152,644
  164,879
  177,594
  190,806
  204,538
  218,812
  233,655
  249,095
  265,164
  281,895
  299,323
  317,487
Total liabilities, $m
  10,116
  17,052
  20,913
  25,279
  30,155
  35,540
  41,431
  47,818
  54,691
  62,040
  69,853
  78,120
  86,831
  95,979
  105,560
  115,571
  126,013
  136,891
  148,210
  159,980
  172,215
  184,930
  198,142
  211,874
  226,148
  240,991
  256,431
  272,500
  289,231
  306,659
  324,823
Total equity, $m
  8,578
  9,802
  12,021
  14,530
  17,333
  20,429
  23,815
  27,486
  31,437
  35,661
  40,152
  44,904
  49,911
  55,169
  60,676
  66,431
  72,433
  78,685
  85,191
  91,957
  98,990
  106,298
  113,893
  121,786
  129,990
  138,522
  147,398
  156,634
  166,251
  176,269
  186,710
Total liabilities and equity, $m
  18,694
  26,854
  32,934
  39,809
  47,488
  55,969
  65,246
  75,304
  86,128
  97,701
  110,005
  123,024
  136,742
  151,148
  166,236
  182,002
  198,446
  215,576
  233,401
  251,937
  271,205
  291,228
  312,035
  333,660
  356,138
  379,513
  403,829
  429,134
  455,482
  482,928
  511,533
Debt-to-equity ratio
  0.546
  0.990
  1.130
  1.230
  1.320
  1.380
  1.430
  1.470
  1.510
  1.530
  1.560
  1.580
  1.590
  1.610
  1.620
  1.630
  1.640
  1.650
  1.650
  1.660
  1.670
  1.670
  1.680
  1.680
  1.680
  1.690
  1.690
  1.690
  1.700
  1.700
  1.700
Adjusted equity ratio
  0.365
  0.365
  0.365
  0.365
  0.365
  0.365
  0.365
  0.365
  0.365
  0.365
  0.365
  0.365
  0.365
  0.365
  0.365
  0.365
  0.365
  0.365
  0.365
  0.365
  0.365
  0.365
  0.365
  0.365
  0.365
  0.365
  0.365
  0.365
  0.365
  0.365
  0.365

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -403
  1,167
  1,385
  1,631
  1,905
  2,206
  2,533
  2,887
  3,266
  3,671
  4,100
  4,571
  5,047
  5,547
  6,070
  6,616
  7,184
  7,776
  8,392
  9,032
  9,698
  10,389
  11,107
  11,854
  12,630
  13,438
  14,277
  15,152
  16,062
  17,011
  18,000
Depreciation, amort., depletion, $m
  1,109
  1,869
  2,287
  2,759
  3,286
  3,869
  4,506
  5,197
  5,941
  6,736
  7,581
  8,451
  9,394
  10,383
  11,420
  12,503
  13,632
  14,809
  16,034
  17,307
  18,631
  20,006
  21,435
  22,921
  24,465
  26,071
  27,741
  29,480
  31,290
  33,175
  35,140
Funds from operations, $m
  221
  3,036
  3,672
  4,390
  5,191
  6,075
  7,039
  8,084
  9,207
  10,407
  11,681
  13,022
  14,441
  15,930
  17,490
  19,118
  20,817
  22,586
  24,426
  26,340
  28,328
  30,395
  32,543
  34,775
  37,096
  39,509
  42,019
  44,632
  47,352
  50,186
  53,140
Change in working capital, $m
  -416
  107
  123
  139
  156
  172
  188
  204
  219
  235
  249
  264
  278
  292
  306
  320
  333
  347
  361
  376
  391
  406
  422
  438
  456
  474
  493
  513
  534
  556
  580
Cash from operations, $m
  637
  2,474
  3,549
  4,251
  5,036
  5,903
  6,851
  7,880
  8,988
  10,172
  11,432
  12,758
  14,163
  15,639
  17,184
  18,799
  20,484
  22,238
  24,065
  25,964
  27,938
  29,989
  32,121
  34,337
  36,640
  39,035
  41,526
  44,119
  46,818
  49,630
  52,560
Maintenance CAPEX, $m
  0
  -1,481
  -1,845
  -2,262
  -2,735
  -3,262
  -3,845
  -4,482
  -5,173
  -5,917
  -6,712
  -7,557
  -8,451
  -9,394
  -10,383
  -11,420
  -12,503
  -13,632
  -14,809
  -16,034
  -17,307
  -18,631
  -20,006
  -21,435
  -22,921
  -24,465
  -26,071
  -27,741
  -29,480
  -31,290
  -33,175
New CAPEX, $m
  -765
  -4,150
  -4,761
  -5,384
  -6,013
  -6,642
  -7,264
  -7,877
  -8,477
  -9,063
  -9,636
  -10,195
  -10,743
  -11,282
  -11,816
  -12,347
  -12,878
  -13,415
  -13,960
  -14,516
  -15,089
  -15,681
  -16,295
  -16,935
  -17,604
  -18,306
  -19,042
  -19,818
  -20,634
  -21,494
  -22,401
Cash from investing activities, $m
  -799
  -5,631
  -6,606
  -7,646
  -8,748
  -9,904
  -11,109
  -12,359
  -13,650
  -14,980
  -16,348
  -17,752
  -19,194
  -20,676
  -22,199
  -23,767
  -25,381
  -27,047
  -28,769
  -30,550
  -32,396
  -34,312
  -36,301
  -38,370
  -40,525
  -42,771
  -45,113
  -47,559
  -50,114
  -52,784
  -55,576
Free cash flow, $m
  -162
  -3,157
  -3,057
  -3,396
  -3,712
  -4,001
  -4,258
  -4,479
  -4,662
  -4,808
  -4,915
  -4,994
  -5,031
  -5,037
  -5,015
  -4,967
  -4,898
  -4,809
  -4,704
  -4,586
  -4,458
  -4,322
  -4,180
  -4,034
  -3,885
  -3,736
  -3,587
  -3,440
  -3,296
  -3,154
  -3,016
Issuance/(repayment) of debt, $m
  0
  3,384
  3,861
  4,366
  4,876
  5,386
  5,890
  6,387
  6,874
  7,349
  7,813
  8,267
  8,711
  9,148
  9,581
  10,011
  10,442
  10,877
  11,319
  11,771
  12,235
  12,714
  13,212
  13,732
  14,274
  14,843
  15,440
  16,069
  16,731
  17,428
  18,164
Issuance/(repurchase) of shares, $m
  0
  0
  1,416
  1,539
  1,639
  1,712
  1,753
  1,763
  1,740
  1,683
  1,593
  1,479
  1,327
  1,148
  941
  711
  458
  184
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  -1
  3,384
  5,277
  5,905
  6,515
  7,098
  7,643
  8,150
  8,614
  9,032
  9,406
  9,746
  10,038
  10,296
  10,522
  10,722
  10,900
  11,061
  11,319
  11,771
  12,235
  12,714
  13,212
  13,732
  14,274
  14,843
  15,440
  16,069
  16,731
  17,428
  18,164
Total cash flow (excl. dividends), $m
  -162
  228
  803
  970
  1,163
  1,384
  1,632
  1,908
  2,211
  2,541
  2,898
  3,273
  3,680
  4,111
  4,566
  5,044
  5,545
  6,069
  6,615
  7,184
  7,777
  8,393
  9,033
  9,698
  10,389
  11,107
  11,853
  12,629
  13,435
  14,274
  15,148
Retained Cash Flow (-), $m
  593
  -1,932
  -2,219
  -2,509
  -2,803
  -3,096
  -3,386
  -3,671
  -3,951
  -4,224
  -4,491
  -4,752
  -5,007
  -5,258
  -5,507
  -5,754
  -6,002
  -6,252
  -6,506
  -6,766
  -7,033
  -7,308
  -7,595
  -7,893
  -8,205
  -8,532
  -8,875
  -9,236
  -9,617
  -10,018
  -10,441
Prev. year cash balance distribution, $m
 
  3,720
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
 
  2,016
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  109
  418
  744
  1,084
  1,438
  1,805
  2,184
  2,575
  2,978
  3,392
  3,818
  4,256
  4,707
Discount rate, %
 
  4.30
  4.52
  4.74
  4.98
  5.23
  5.49
  5.76
  6.05
  6.35
  6.67
  7.00
  7.35
  7.72
  8.11
  8.51
  8.94
  9.39
  9.86
  10.35
  10.87
  11.41
  11.98
  12.58
  13.21
  13.87
  14.56
  15.29
  16.05
  16.86
  17.70
PV of cash for distribution, $m
 
  1,933
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  20
  64
  95
  112
  119
  118
  111
  100
  87
  73
  59
  46
  35
Current shareholders' claim on cash, %
  100
  100.0
  82.9
  70.1
  60.3
  52.9
  47.1
  42.6
  39.1
  36.3
  34.1
  32.4
  31.1
  30.1
  29.4
  28.9
  28.6
  28.5
  28.5
  28.5
  28.5
  28.5
  28.5
  28.5
  28.5
  28.5
  28.5
  28.5
  28.5
  28.5
  28.5

Cenovus Energy Inc. develops, produces, and markets crude oil, natural gas liquids (NGLs), and natural gas in Canada. Its Oil Sands segment develops and produces bitumen assets at Foster Creek, Christina Lake, Narrows Lake, and the Athabasca natural gas assets, as well as projects in the early stages of development, such as Grand Rapids and Telephone Lake. The company’s Conventional segment engages in the development and production of conventional crude oil, NGLs, and natural gas in Alberta and Saskatchewan in Canada, including the heavy oil assets at Pelican Lake. This segment also includes the carbon dioxide enhanced oil recovery project at Weyburn. Its Refining and Marketing segment transports, sells, and refines crude oil into petroleum and chemical products. This segment also owns 50% interest ownership in two refineries in the United States. The company is headquartered in Calgary, Canada.

FINANCIAL RATIOS  of  Cenovus Energy (CVE)

Valuation Ratios
P/E Ratio -14.3
Price to Sales 0.6
Price to Book 0.7
Price to Tangible Book
Price to Cash Flow 9.1
Price to Free Cash Flow -45
Growth Rates
Sales Growth Rate -7.1%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -39.7%
Cap. Spend. - 3 Yr. Gr. Rate -20.6%
Financial Strength
Quick Ratio NaN
Current Ratio 0
LT Debt to Equity 54.6%
Total Debt to Equity 54.6%
Interest Coverage 0
Management Effectiveness
Return On Assets -2.1%
Ret/ On Assets - 3 Yr. Avg. 1.1%
Return On Total Capital -3%
Ret/ On T. Cap. - 3 Yr. Avg. 1.8%
Return On Equity -4.5%
Return On Equity - 3 Yr. Avg. 2.8%
Asset Turnover 0.5
Profitability Ratios
Gross Margin 42.4%
Gross Margin - 3 Yr. Avg. 43.3%
EBITDA Margin 4.7%
EBITDA Margin - 3 Yr. Avg. 13.7%
Operating Margin -2.8%
Oper. Margin - 3 Yr. Avg. 5.1%
Pre-Tax Margin -7.6%
Pre-Tax Margin - 3 Yr. Avg. 0.8%
Net Profit Margin -4.5%
Net Profit Margin - 3 Yr. Avg. 1.3%
Effective Tax Rate 41.3%
Eff/ Tax Rate - 3 Yr. Avg. 21.3%
Payout Ratio -30.5%

CVE stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the CVE stock intrinsic value calculation we used $12134 million for the last fiscal year's total revenue generated by Cenovus Energy. The default revenue input number comes from 2016 income statement of Cenovus Energy. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our CVE stock valuation model: a) initial revenue growth rate of 24.6% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 4.3%, whose default value for CVE is calculated based on our internal credit rating of Cenovus Energy, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of Cenovus Energy.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of CVE stock the variable cost ratio is equal to 88%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $0 million in the base year in the intrinsic value calculation for CVE stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 3.5% for Cenovus Energy.

Corporate tax rate of 27% is the nominal tax rate for Cenovus Energy. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the CVE stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for CVE are equal to 139.1%.

Life of production assets of 11.4 years is the average useful life of capital assets used in Cenovus Energy operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for CVE is equal to 3.6%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $11590 million for Cenovus Energy - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 800.784 million for Cenovus Energy is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of Cenovus Energy at the current share price and the inputted number of shares is $5.5 billion.


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COMPANY NEWS

▶ Are ConocoPhillipss Debt Reduction Plans on Track?   [Jun-26-17 05:35PM  Market Realist]
▶ DBRS downgrades Cenovus after ConocoPhillips deal   [Jun-23-17 03:35PM  Reuters]
▶ Morningstar Runs the Numbers   [Jun-17-17 06:00AM  Morningstar]
▶ ConocoPhillips' Most Brilliant Moves in 2017 So Far   [Jun-15-17 04:30PM  Motley Fool]
▶ Cenovus to webcast Investor Day 2017   [Jun-13-17 04:30PM  GlobeNewswire]
▶ 3 Reasons ConocoPhillips Stock Could Rise   [10:00AM  Motley Fool]
▶ Why These 5 Oil Companies Fell More Than 10% in May   [Jun-08-17 09:44AM  Motley Fool]
▶ ConocoPhillips: The Bear Case From a Bull   [Jun-06-17 05:13PM  Motley Fool]
▶ New BC Government Could Jeopardize Canadian Oil Exports   [Jun-01-17 06:00PM  Oilprice.com]
▶ Canadian Oil Sands Brace As Oil Majors Dump Shares   [May-30-17 06:00PM  Oilprice.com]
▶ ETFs with exposure to Cenovus Energy, Inc. : May 26, 2017   [May-26-17 01:04PM  Capital Cube]
▶ ConocoPhillips Completes Canadian Divestitures on Schedule   [May-22-17 01:24PM  Market Realist]
▶ Here's Why the Best Is Yet to Come for ConocoPhillips   [May-18-17 02:30PM  Motley Fool]
▶ ETFs with exposure to Cenovus Energy, Inc. : May 11, 2017   [May-11-17 04:28PM  Capital Cube]
▶ Stocks That Fell to 3-Year Lows   [May-05-17 11:18PM  GuruFocus.com]
▶ The Market Is Missing Cenovus' Potential   [May-03-17 07:00AM  Morningstar]
▶ ETFs with exposure to Cenovus Energy, Inc. : May 1, 2017   [May-01-17 03:50PM  Capital Cube]
▶ Canadian Oil Patch Shrugs Off Trumps Trade War Threat   [Apr-30-17 04:00PM  Oilprice.com]
▶ Cenovus posts 1Q profit   [07:44AM  Associated Press]
▶ Cenovus CEO Defends Conoco Deal   [Apr-21-17 06:46PM  Bloomberg]
▶ Why ConocoPhillips Is Divesting San Juan Basin Assets   [Apr-18-17 09:26AM  Market Realist]
▶ 3 Stocks the Market Is Wrong About   [Apr-17-17 08:44AM  Motley Fool]
▶ Big Oil Is Set To Disappoint Again With Q1 Results   [Apr-16-17 07:00PM  Oilprice.com]
▶ ConocoPhillips' Asset Exodus Continues   [Apr-13-17 01:07PM  Motley Fool]
▶ Cenovus achieves key acquisition financing milestones   [Apr-06-17 08:02PM  Marketwired]
▶ ConocoPhillips to Sell $13.3 Billion in Oil Sands Assets   [Apr-05-17 02:23PM  Motley Fool]
▶ Cenovus prices $2.9 bln debt offering   [Apr-04-17 06:10PM  Reuters]
▶ First Solar, Rite Aid Dip into Mondays 52-Week Low Club   [Apr-03-17 04:04PM  24/7 Wall St.]
▶ [$$] Goodbye to the Great White North   [Apr-01-17 12:01AM  at Barrons.com]
▶ Conoco's Winning with Oil Sands Sale to Cenovus   [11:30AM  at Investopedia]
Stock chart of CVE Financial statements of CVE
Valuation of Stocks

The paper VALUATION OF STOCKS: The Quest for Intrinsic Value provides a detailed description of our valuation model and discloses the calculation algorithm.

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