Cenovus (TSX:CVE) posts $224M profit in Q2. An energy stock to buy?

Summary

  • Cenovus posted a positive bottom line of C$ 244 million in the second quarter, compared with the previous year's loss. 
  • The energy stock has swelled by three-digit in the last nine months on the back of its acquisition of Husky Energy.
  • The company has increased its production guidance for 2021.  

Stocks of Cenovus Energy Inc. (TSX:CVE) climbed as much as three per cent on Thursday, July 29, following the announcement of its profit of C$ 224 million in the second quarter of 2021. 

The surge in its net income came on the back of its latest acquisition of Husky Energy Inc.

The Canadian energy firm delivered earnings per share of C$ 0.11 in the latest quarter, as against a loss of C$ 0.19 a year ago. Its top line was C$ 10.58 billion in Q2 2021, up 387 per cent on a year-over-year (YoY) basis, surpassing Bay Street-based analysts’ expectations.

The company’s net debt improved by C$ 1 billion YoY, and it earned cash of $1.4 billion from its operating activities in Q2 2021.

Cenovus’s production also boomed over 765,900 barrels of oil equivalent a day (boe/d) in Q2 2021, which was a surge of 65 per cent compared to 465,400 boe/d in Q2 2020. 

Let us look at the oil producer's stock performance and guidance for 2021.

Cenovus Energy Inc. (TSX:CVE)

The Calgary-based company’s stock soared over 136 per cent in the last nine months, propelled by the addition of Husky Energy. Its previous closing price was C$ 10.17 apiece, and its market cap was 21 billion. 

The energy stock has amplified by 31 per cent year-to-date (YTD) to beat the S&P/TSX Integrated Oil & Gas Index’s growth of 13 per cent. It has yielded more than 60 per cent in the past one year. 

CVE stock has gone through a downside correction of 12 per cent quarter-to-date (QTD). The scrip is down by 19 per cent against its one-year high of C$ 12.86 apiece (Recorded on June 15, 2021). 

The company distributes a quarterly dividend of C$ 0.018 apiece, which dropped sharply from the previous year's dividend of C$ 0.063 apiece.

Cenovus’ one-year price performance against moving average multiple. (Source: Refinitiv)

At its previous price, CVE stock was moving 15 per cent ahead of its 200-day simple moving average, representing a long-term gaining trend. However, it has fallen behind against its short-term moving average multiple. 

Cenovus Guidance 2021

Cenovus has improved its production guidance for the second half of 2021 by two per cent, but it has kept total working capital unchanged. The company also expects to reduce its total debt to C$ 10 billion by the end of this year. 

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