Crescent Point Energy Corp. (TSX:CPG)(NYSE:CPG), one of leading producers of crude oil and natural gas in North America, announced fourth-quarter earnings on the morning of March 11, and its stock has responded by rising over 3%. The company’s stock still sits more than 40% below its 52-week high, so let’s take a closer look at the results to determine if this could be the start of a sustained rally higher and if we should consider initiating long-term positions today.
The fourth-quarter results are in
In the fourth quarter of fiscal 2014, Crescent reported a net profit of $121.36 million, or $0.27 per share, compared to a net loss of $13.72 million, or $0.03 per share, in the same quarter a year ago, as its cash flow from operations increased 7.4% to $572.87 million. The company noted that these very strong results could be attributed to its total production increasing 20.5% from the year-ago period to a record 153,822 barrels of oil equivalents per day.
Here’s a quick breakdown of eight other notable statistics from the report compared to the year-ago period:
- Average daily production of crude oil and natural gas liquids increased 21.4% to 140,767 barrels per day
- Average daily production of natural gas increased 11.9% to 78.33 million cubic feet per day
- Average selling price of crude oil and natural gas liquids decreased 16.1% to $69.51 per barrel
- Average selling price of natural gas increased 6.9% to $4.17 per thousand cubic feet
- Cash flow from operating activities increased 28.3% to $651.85 million
- Capital expenditures increased 43.8% to $698.26 million
- Paid out dividends totaling $0.69 per share during the quarter for a total cost of approximately $310.46 million, compared to dividends totaling $0.69 per share for a total cost of approximately $274.8 million in the year-ago period
- Net debt increased 53.6% to $3.19 billion
Crescent also provided its outlook on fiscal 2015, calling for the following performance:
- The production of approximately 140,600 barrels of oil and natural gas liquids per day
- The production of approximately 71.4 million cubic feet of natural gas per day
- Cash dividends per share of approximately $2.76
- Capital expenditures of approximately $1.45 billion
Is now the time to buy shares of Crescent Point Energy?
I think the post-earnings pop in Crescent’s stock is only the beginning of a sustained rally higher, because it still trades at low valuations and because it pays a very high dividend.
First, Crescent’s stock trades at very inexpensive valuations, including just 23.6 times fiscal 2014’s earnings per share of $1.21 and only 19.9 times fiscal 2015’s estimated earnings per share of $1.43.
Second, Crescent pays a monthly dividend of $0.23 per share, or $2.76 annually, which gives its stock a very high 9.7% yield, and I think this makes it qualify as both a value and dividend play today.
With all of the information above in mind, I think Crescent Point Energy Corp. represents one of the best long-term investment opportunities in the energy industry today. Foolish investors should take a closer look and strongly consider establishing long-term positions.
