May 18, 2023
Top 10 Stock Cenovus Strong Buy Recommendation
How to read the ranks
For every stock, we judge its performance against its peers and rank it on a scale of 1 to 100. The higher the rank, the better the stock performs than its peers. And, we do this for six investment strategies:
Value - shows how good of a value the stock is. Green is "inexpensive"; red is "expensive".
Growth - shows a company's growth potential. Green is "high growth" expected; red is "tough times ahead".
Safety - relates to the amount of debt a company has. Green is low debt level; red is high debt level.
Combined Financial - this isn't an average of the first three ranks but rather a consolidated view across several financial indicators. Green = good; red = tread carefully.
(NEW) Sentiment - quantifies professional analyst ratings and holdings as well as market pulse. Green = positive sentiment; red = skepticism (Only available to Premium Subscribers).
(NEW) 360° View - the ultimate rating with all financial and non-financial indicators.
Snapshot: Cenovus – Top 10 Stock in Oil & Gas Mining and Production
Cenovus is listed as a top 10 stock on May 18, 2023 in the market index Oil & Gas because of its high performance in at least one of the Obermatt investment strategies. As three out of four consolidated Obermatt Ranks exhibit excellent performance, it is a solid investment where the risk of paying too much for the shares is low, despite a currently slow growth momentum. Based on the Obermatt 360° View of 83 (top 83% performer), Obermatt assesses an overall strong buy recommendation for Cenovus on May 18, 2023.
Snapshot: Obermatt Ranks
| Country | Canada |
| Industry | Oil & Gas Integrated |
| Index | Low Emissions, Oil & Gas, Water Efficiency, TSX Composite |
| Size class | XX-Large |
When Obermatt identifies the Top 10 stocks in a market, it’s based on a certain investment strategy. The best performing stocks usually aren’t the ones that everyone is talking about (those are often "over-priced" and have low Value ranks).
For each investment strategy, we provide you with more detailed analysis and our recommendation. You see the ranks of the top 10 stocks ranked by that particular investment strategy (360° View, Sentiment, Value, Growth, Safety and Combined Financial Performance).
360° View: Obermatt 360° Assessment Cenovus Strong Buy
| 360 METRICS | May 18, 2023 | |||||||
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| VALUE | ||||||||
| VALUE | 81 |
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| GROWTH | ||||||||
| GROWTH | 15 |
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| SAFETY | ||||||||
| SAFETY | 75 |
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| SENTIMENT | ||||||||
| SENTIMENT | 87 |
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| 360° VIEW | ||||||||
| 360° VIEW | 83 |
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ANALYSIS: With an Obermatt 360° View of 83 (better than 83% compared with alternatives) for 2023, overall professional sentiment and engagement for the stock Cenovus are very positive. The 360° View is based on consolidating four consolidated indicators, with half of the indicators below and half above average for Cenovus. The consolidated Value Rank has an attractive rank of 81, which means that the share price of Cenovus is on the lower side compared with typical size in indicators such as revenues, profits, and invested capital. This means the stock price is lower than for 81% of alternative stocks in the same industry. The company is also safely financed with a Safety rank of 75. In addition, professional market sentiment is above average compared with other stock investment alternatives with a Sentiment Rank of 87. But the consolidated Growth Rank has a low rank of 15, which means that the company is below average in terms of growth, and momentum when looking at financial metrics such as revenue, profit, and invested capital growth as well as stock returns. 85 of its competitors have better growth. ...read more
RECOMMENDATION: With a 360° View of 83, Cenovus is better than 83% of all alternative stock investment opportunities based on the Obermatt Method. Three out of four consolidated Obermatt Ranks show above-average performance. The stock has as good value (Value Rank of 81), secure financing practices (Safety Rank of 75), and positive market sentiment in the professional investor community (Sentiment Rank of 87). It is a solid stock investment where the risk of paying too much for the shares is limited, and disappointments are less likely to occur. The company growth expectations are below the industry average (Growth Rank of 15), but that could also be temporary since professional investors remain optimistic despite the low growth numbers. The low price as reflected in the good value ranking can sometimes indicate that the company's future is challenging. The below-par growth performance may be the reason for this. Companies that grow less are typically cheaper than fast-growing competitors. We recommend evaluating whether the future of Cenovus is as difficult as the stock’s low price suggests, despite the positive professional investor sentiment. Since the professional community is optimistic, you might have less to worry about, and the stock may just go through a more challenging phase now, indicating good timing. ...read more
Sentiment Strategy: Professional Market Sentiment for Cenovus very positive
ANALYSIS: With an Obermatt Sentiment Rank of 87 (better than 87% compared with alternatives) for 2023, overall professional sentiment and engagement for the stock Cenovus is very positive. The Sentiment Rank is based on consolidating four sentiment indicators where all but one are above average for Cenovus. Analyst Opinions are at a rank of 85 (better than 85% of alternative investments), which means that currently, stock research analysts tend to recommend a stock investment in the company. The Professional Investors rank is also good at 79, which means that currently, professional investors hold more stock in this company than in 79% of alternative investment opportunities. Pros tend to favor investing in this company. In addition, Market Pulse has a rank of 74 which means that the current professional news and professional social networks are on the positive side when discussing this company (more positive news than for 74% of competitors). But Analyst Opinions Change has a below-average rank of 33, which means that stock research experts are currently changing their opinions for the worse when it comes to recommending this stock. In other words, they are getting more critical of investments in Cenovus. ...read more
RECOMMENDATION: With an Obermatt Sentiment Rank of 87 (more positive than 87% compared with investment alternatives), Cenovus has a reputation among professional investors that is significantly higher than that of its competitors. This is an early sign of caution, even if the stock has significantly appreciated. If analysts change their opinions, the stock may become too expensive. If the price is on the way down, the trend may continue. This may be a stock with a good reputation and history, but it may have reached its breaking point by now. Investors should look at the Value Ranks as well. If they indicate trouble, it might just materialize in the future. ...read more
Value Strategy: Cenovus Stock Price Value at the top
ANALYSIS: With an Obermatt Value Rank of 81 (better than 81% compared with alternatives) for 2023, Cenovus shares are significantly less expensive than comparable stocks. The Value Rank is based on consolidating four value indicators, with three out of four indicators above average for Cenovus. Price-to-Sales (P/S) is 81, which means that the stock price compared with what market professionals expect for future sales is lower than for 81% of comparable companies, indicating a good value regarding Cenovus's revenue size. The same is valid for expected Price to Profits (or Price / Earnings, P/E), more favorable than for 69% of alternatives, and it's also true for the Price-to-Book Capital ratio (also referred to as market-to-book ratio) with a Price-to-Capital Rank of 66. But, compared with other companies in the same industry, dividend yields are expected to be lower than average; only 39% of all competitors have even lower dividend yields than Cenovus (an Dividend Yield Rank of 39). 61% alternative investments in the same business provide a higher dividend yield. ...read more
RECOMMENDATION: The overall picture with a consolidated Value Rank of 81, is a strong buy recommendation based on Cenovus's stock price compared with the company's operational size and dividend yields. The below-average dividend yield may be a good sign, as it could mean the company has more attractive investment opportunities for the generated cash than to pay it out as dividends. A low dividend yield can also indicate a growth phase. ...read more
Growth Strategy: Cenovus Growth Momentum negative
ANALYSIS: With an Obermatt Growth Rank of 15 (better than 15% compared with alternatives), Cenovus shows one of the most restricted growth dynamics in its industry. There is little momentum in this company. The Growth Rank is based on consolidating four value indicators, with three out of four metrics below average for Cenovus. While Profit Growth has a good rank of 56, as professionals currently expect the company to grow its profits more than 56% of its competitors, all other growth indicators are below market averages. Sales Growth has a rank of 20, which means that currently professionals expect the company to grow less than 80% of its competitors, while Capital Growth has a rank of 43 and Stock Returns have been below market median, with a rank of 29 (71% of alternative investments were better). ...read more
RECOMMENDATION: The overall picture with a consolidated Value Rank of 15, is a SELL recommendation for growth and momentum investors. While revenue growth and capital growth are good growth momentum indicators, profit is less reliable, because profits may increase due to cost-cutting measures which typically indicate negative growth momentum. "You can save a dollar only once" is the saying about such situations. Growth Investors should look at company priorities closely if they are interested in growth, because the increase in profits is not usually an indicator of growth, and stock prices have been below market, too. ...read more
Safety Strategy: Cenovus Debt Financing Safety very solid
| SAFETY METRICS | May 18, 2023 | |||||||
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| LEVERAGE | ||||||||
| LEVERAGE | 60 |
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| REFINANCING | ||||||||
| REFINANCING | 89 |
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| LIQUIDITY | ||||||||
| LIQUIDITY | 57 |
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| CONSOLIDATED RANK: SAFETY | ||||||||
| CONSOLIDATED RANK: SAFETY | 75 |
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ANALYSIS: With an Obermatt Safety Rank of 75 (better than 75% compared with alternatives) for 2023, the company Cenovus has safe financing practices, which means that their overall debt burden is low. This doesn't mean that the business of Cenovus is safe, it only means that the company is on the safer side regarding possible bankruptcy, assuming that public reporting is correct. The Safety Rank is based on consolidating three financing indicators, where all three are above average for Cenovus. Leverage is at 60, meaning the company has a below-average debt-to-equity ratio. It has less debt than 60% of its competitors. Refinancing is at a rank of 89, meaning that the portion of the debt about to be refinanced is below average. It has less debt in the refinancing stage than 89% of its competitors. Finally, Liquidity is also good at a rank of 57, which means that the company generates more profit to service its debt than 57% of its competitors. ...read more
RECOMMENDATION: With an Obermatt Safety Rank of 75 (better than 75% compared with alternatives), Cenovus has a financing structure that is significantly safer than that of its competitors. These three positive financing indicators signal that the company is less likely to default on its debt obligations. However, it also means that its shareholder returns will be more modest if things go well. A low safety means fewer troubles in downtimes and less upside in good times. ...read more
Combined financial peformance: Cenovus Above-Average Financial Performance
| COMBINED PERFORMANCE | May 18, 2023 | |||||||
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| VALUE | ||||||||
| VALUE | 81 |
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| GROWTH | ||||||||
| GROWTH | 15 |
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| SAFETY | ||||||||
| SAFETY | 57 |
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| COMBINED | ||||||||
| COMBINED | 65 |
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ANALYSIS: With an Obermatt Combined Rank of 65 (better than 65% compared with investment alternatives), Cenovus (Oil & Gas Integrated, Canada) shares have above-average financial characteristics compared with similar stocks. Shares of Cenovus are a good value (attractively priced) with a consolidated Obermatt Value Rank of 81 (better than 81% of alternatives), are safely financed (Safety Rank of 75, which means low debt burdens), but show below-average growth (Growth Rank of 15). ...read more
RECOMMENDATION: An Obermatt Combined Rank of 65, is a buy recommendation based on Cenovus's financial characteristics. As the company Cenovus's key financial metrics exhibit good value (Obermatt Value Rank of 81) but low growth (Obermatt Growth Rank of 15) while being safely financed (Obermatt Safety Rank of 75), it may be a safer investment because companies with low debt can better withstand times of crises. Yet the good value, better than 81% of comparable companies, may also indicate that the company's future is challenging. If you believe that low growth is temporary or just due to a specific current event, you may conclude that the good value of the stock provides an attractive investment opportunity and the downside is limited due to below-average financing risks. ...read more
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