Cenovus Energy (TSX:CVE)(NYSE:CVE) reported its first-quarter earnings results on April 26. With commodity prices declining in recent months, the company's performance wasn't as impressive as it was a year ago. For the first three months of 2023, the company's revenue totaled $12.3 billion – down 24% from the $16.2 billion that Cenovus reported in the prior-year period. Its net earnings of $636 million were also less than half of the $1.6 billion it reported a year ago.
A year ago, the price of West Texas Intermediate, a key benchmark for the oil and gas industry, was at over US$100/barrel. It has been falling steadily and is now at around US$77/barrel. Cenovus is a stock that normally see its value follow the price of oil simply because there is often a direct relationship between the price of oil and how strong Cenovus' earnings numbers will be. Over the past 12 months, the stock has lost 8% of its value. Cenovus' stock now trades just a few dollars from its 52-week low of $19.90. Over the past five years, however, the oil and gas stock is up 77%, which compares favorably to the S&P 500 which has risen 56% over the same time frame.
And despite the weakness in oil prices, the company did announce a generous 33% increase to its quarterly dividend. Investors will now be receiving $0.56 per share on an annual basis. That puts the stock's yield at around 2.5%.
For investors who want a hedge against inflation and a decent dividend, Cenovus can still be a good buy.
