Critical Analysis: Cenovus Energy (CVE) & Occidental Petroleum (OXY)

Cenovus Energy (NYSE: CVE) and Occidental Petroleum (NYSE:OXY) are both large-cap oils/energy companies, but which is the better investment? We will contrast the two businesses based on the strength of their profitability, analyst recommendations, earnings, institutional ownership, dividends, valuation and risk.

Analyst Recommendations

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This is a summary of recent recommendations for Cenovus Energy and Occidental Petroleum, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Cenovus Energy 2 7 6 0 2.27
Occidental Petroleum 1 13 5 0 2.21

Cenovus Energy currently has a consensus target price of $13.75, suggesting a potential upside of 39.17%. Occidental Petroleum has a consensus target price of $73.38, suggesting a potential downside of 1.87%. Given Cenovus Energy’s stronger consensus rating and higher probable upside, equities research analysts clearly believe Cenovus Energy is more favorable than Occidental Petroleum.

Risk & Volatility

Cenovus Energy has a beta of 0.71, suggesting that its share price is 29% less volatile than the S&P 500. Comparatively, Occidental Petroleum has a beta of 0.65, suggesting that its share price is 35% less volatile than the S&P 500.

Profitability

This table compares Cenovus Energy and Occidental Petroleum’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Cenovus Energy 18.92% 0.53% 0.25%
Occidental Petroleum 9.88% 3.29% 1.63%

Earnings & Valuation

This table compares Cenovus Energy and Occidental Petroleum’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Cenovus Energy $13.14 billion 0.92 $2.60 billion ($0.02) -494.00
Occidental Petroleum $13.27 billion 4.31 $1.31 billion $0.89 84.01

Cenovus Energy has higher earnings, but lower revenue than Occidental Petroleum. Cenovus Energy is trading at a lower price-to-earnings ratio than Occidental Petroleum, indicating that it is currently the more affordable of the two stocks.

Dividends

Cenovus Energy pays an annual dividend of $0.16 per share and has a dividend yield of 1.6%. Occidental Petroleum pays an annual dividend of $3.08 per share and has a dividend yield of 4.1%. Cenovus Energy pays out -800.0% of its earnings in the form of a dividend. Occidental Petroleum pays out 346.1% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Occidental Petroleum has increased its dividend for 15 consecutive years. Occidental Petroleum is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Insider & Institutional Ownership

74.4% of Cenovus Energy shares are owned by institutional investors. Comparatively, 82.7% of Occidental Petroleum shares are owned by institutional investors. 0.1% of Occidental Petroleum shares are owned by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Summary

Occidental Petroleum beats Cenovus Energy on 10 of the 17 factors compared between the two stocks.

About Cenovus Energy

Cenovus Energy Inc., together with its subsidiaries, develops, produces, and markets crude oil, natural gas liquids, and natural gas in Canada and the United States. The company's Oil Sands segment develops and produces bitumen and natural gas in northeast Alberta. This segment's bitumen assets include Foster Creek, Christina Lake, and Narrows Lake, as well as projects in the early stages of development, such as Telephone Lake. This segment also holds the Athabasca natural gas assets. Its Deep Basin segment holds assets primarily located in Elmworth-Wapiti, Kaybob-Edson, and Clearwater operating areas of British Columbia and Alberta, and include interests in natural gas processing facilities. The company's Refining and Marketing segment transports, sells, and refines crude oil into petroleum and chemical products. This segment owns a 50% interest ownership in two refineries in the United States; owns and operates a crude-by-rail terminal in Alberta; and markets third-party purchases and sales of product. Cenovus Energy Inc. is headquartered in Calgary, Canada.

About Occidental Petroleum

Occidental Petroleum Corporation, together with its subsidiaries, engages in the acquisition, exploration, and development of oil and gas properties in the United States and internationally. The company operates through three segments: Oil and Gas, Chemical, and Midstream and Marketing. The Oil and Gas segment explores for, develops, and produces oil and condensate, natural gas liquids (NGLs), and natural gas. The Chemical segment manufactures and markets basic chemicals, including chlorine, caustic soda, chlorinated organics, potassium chemicals, ethylene dichloride, chlorinated isocyanurates, sodium silicates, and calcium chloride; vinyls comprising vinyl chloride monomer, polyvinyl chloride, and ethylene. The Midstream and Marketing segment gathers, processes, transports, stores, purchases, and markets oil, condensate, NGLs, natural gas, carbon dioxide, and power. This segment also trades around its assets consisting of transportation and storage capacity; operates a crude oil export terminal; and invests in entities. Occidental Petroleum Corporation was founded in 1920 and is headquartered in Houston, Texas.

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