Cenovus (CVE) Down 1.5% Since Last Earnings Report: Can It Rebound?

It has been about a month since the last earnings report for Cenovus Energy (CVE). Shares have lost about 1.5% in that time frame, outperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Cenovus due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.

Cenovus Energy Q3 Earnings Miss

Cenovus Energy reported third-quarter 2021 earnings per share of 21 cents, missing the Zacks Consensus Estimate of earnings of 36 cents owing to rising transportation and blending expenses. The bottom line, however, turned around from the year-ago loss of 28 cents per share, thanks to higher daily oil sand production.

Revenues of $10,667 million increased from the year-ago $2,861 million.

Dividend Hike

The integrated energy player got authorization from the board of directors to increase the fourth-quarter dividend to 3.5 Canadian cents, reflecting a 100% increase from the prior-quarter dividend payout. The new dividend is payable on Dec 31, to common shareholders of record as of Dec 15.

The company has also unveiled a plan to repurchase up to 146.5 million of its common shares.

Operational Performance

Upstream

Quarterly operating margin from the Oil Sands unit was reported at C$1,923 million, improving from the year-ago C$634 million. Higher daily oil sand production primarily aided the segment.

In the September quarter, the company recorded daily oil sand production of 597 thousand barrels, up 54.7% year over year on contributions from its Christina Lake and Foster Creek operations.

Operating margin at the Conventional unit was C$191 million, up from C$30 million in the year-ago quarter. In the September quarter, the company recorded daily liquids production of 31.5 thousand barrels, up 22.1% year over year.

The Offshore segment generated operating margin of C$328 million. In the September quarter, the company recorded daily offshore liquid production of 26.6 thousand barrels.

Downstream

From the Canadian Manufacturing unit, the company reported operating margin of C$130 million, up from C$7 million in the year-ago quarter. The company recorded Crude Oil processed volumes at 108.3 thousand barrels per day (MBbl/D).

Operating margin from the U.S. Manufacturing unit was reported at C$122 million, turning around from a loss of C$77 million in the prior-year quarter. The outperformance was owing to higher demand for refined products. Crude oil processed volumes were recorded at 445.8 MBbl/D, signifying an improvement from 191.1 MBbl/D in the year-ago quarter.

From the Retail unit, the company reported operating margin of C$16 million.

Expenses

Transportation and blending expenses in the reported quarter increased to C$1,941 million from C$1,036 million a year ago. Expenses for purchased products rose to C$7,975 million from C$1,444 million in the prior-year quarter.

Capital Investment & Balance Sheet

The company made total capital investment of C$647 million in the quarter under review.

As of Sep 30, 2021, the Canadian energy player had cash and cash equivalents of C$2,010 million. Total long-term debt was C$12,986 million. Its total debt to capitalization was 34.8%.

How Have Estimates Been Moving Since Then?

It turns out, fresh estimates have trended upward during the past month. The consensus estimate has shifted 18.31% due to these changes.

VGM Scores

Currently, Cenovus has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been trending upward for the stock, and the magnitude of this revision looks promising. It comes with little surprise Cenovus has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.

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