Cenovus Energy: The Best It Gets, Now Time To Sell

Nov. 07, 2022 6:37 AM ETCenovus Energy Inc. (CVE), CVE:CA47 Comments
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DT Analysis
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Summary

  • Cenovus Energy benefited greatly as oil prices surged during 2022 and saw them deleverage.
  • They are now on the cusp of returning the entirety of their free cash flow to shareholders but in the medium to long term, their shares do not offer desirable value.
  • In the short term, economic risks are more likely to provide a catalyst for their share price to sell off rather than a rally.
  • I see no further positive catalysts in sight as their deleveraging is almost complete and thus likely reflected in their share price.
  • As a result, I now believe that downgrading to a sell rating is appropriate after their recent share price rally because this is the best it gets.

barrels of oil, a judge"s hammer against the background of dollar bills.

Gerasimov174/iStock via Getty Images

Introduction

The start of 2022 was one of the best times in many years for oil companies, such as Cenovus Energy (NYSE:CVE) as their financial performance and share price surged along with oil prices. Although sadly, as

Cenovus Energy Ratings

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Cenovus Energy Capital Structure

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Cenovus Energy Leverage

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This article was written by

DT Analysis profile picture
10.67K Followers
My analysis primarily focuses on income investments with a preference for those sporting high and very high yields.  This space often contains value traps, although it also contains very desirable opportunities that have the potential to generate significant alpha for investors.  I endeavor to help investors make their own investment selections by providing my insights into financial information released by companies in the context of the current economic outlook.  Whilst I offer ratings via this site, these should not be taken as financial advice nor to proceed with a particular investment.  Apart from my extensive personal investment experience that spans over a decade, I have also obtained a Bachelor degree with Honours majoring in Finance, minoring in Accounting.

Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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