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Bear of the Day: Cenovus Energy Inc. (CVE)

Cenovus Energy Inc. (CVE) is an integrated oil and energy firm that experienced a wave of downward earnings revisions recently. Cenovus Energy is also part of a low-ranked Zacks industry, and energy is the only one of 11 S&P 500 sectors still in the red over the trailing three months.

CVE Basics

Cenovus Energy is a Canadian-based integrated energy company headquartered in Calgary. The firm runs oil and natural gas production operations in Canada and the Asia Pacific region. Meanwhile, its upgrading, refining, and marketing operations are based in Canada and the U.S.

Cenovus Energy has been on a wild ride alongside oil and energy prices since the initial Covid-19 selloff. CVE is coming off an impressive stretch of top and bottom-line growth along with nearly all of its peers. But CVE, like the entire industry, faces off against a hard to compete against stretch and a slowing global economy.

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Zacks Investment Research

Image Source: Zacks Investment Research

Zacks estimates call for Cenovus Energy’s adjusted earnings to fall roughly 33% in FY23 on 28% lower sales.

The company is currently projected to bounce back on both the top and bottom lines in 2024. However, CVE’s earnings revisions have started to trend in the wrong direction again recently.  

Cenovus Energy’s FY23 earnings estimate is down around 6% in the last 60 days, with its FY24 estimates 5% lower. The company’s fourth quarter earnings figure is currently 33% lower than it was several months ago. Worse yet, CVE’s most recent/most accurate estimates came in far below the already beaten-down consensus.

Zacks Investment Research
Zacks Investment Research

Image Source: Zacks Investment Research

Bottom Line

Cenovus Energy lands a Zacks Rank #5 (Strong Sell) at the moment because of its negative revisions trend. Therefore, investors might want to stay away from the stock for now, or at least until after it reports on February 15.

CVE shares are down -40% in the last 10 years vs. the Zacks Oil and Energy sector’s -20% downturn and the S&P 500’s +180% climb. Cenovus Energy stock is also trading below its 21-day, 50-day, and 200-day moving averages.

All that said, some investors might want to circle CVE on their watchlists since fossil fuels are poised to play a huge role in the global economy for a long time.

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