RE:FCF, Dividends, DebtThis looks like a disguised SGY pump.
Nice try, but I would never touch SGY. A dismally managed company by an exec team with a poor track recorde. They have pretty much driven the company into the ground with high resource prices happening just in time to save them from bankruptcy.
As Nuttall says "SGY is a never, ever buy for me".
geezer21 wrote: Dividends are the last thing you want free cash flow going to. You do not want a few percentage return on your investment. You want your investment earning a high rate of return through business operations of the company. You also want a company to keep debt that is earning more in income than what is getting paid out in interest.
ERF and SES pay a dividend but are losing money. Not a good use of company funds to give a dividend over using the money instead to generate profits. CVE, PEY, BIR,and TVE pay dividends but their earnings per share are less then a dollar. Not a good use of company money to be paying a dividend. The money should be getting used to generate profits.
Only three mid-tier oil companies, CPG, TVA, and WCP pay a dividend but are still able to maintain a good rates of return on equity. CPG and WCP can be bought at a lower price to book than TVE. Surge (SGY) has the lowest price to book at 0.9 and highest rate of return on equity.
SGY, OBE, BTE, CJ and NVA do not pay a dividend, however they make up for that with high rates of return on equity of the mid-tier oil producers. Rather than distributing money to shareholder they are using it to generate high rates of return on equity for shareholders that exceed what shareholders would get in a dividend yeild. These are better managed companies. SGY stands out with the highest rate of return on equity, 178%, and lowest price to book at 0.9. BTE comes in with a 126.3% return on euqity.
Dividends are the last thing you want. You want your company growing profits,making money for you and not just giving measley percentage that you can get with risk free GICs.
You want a company using your money and bank money to generate profits far in excess of any interest or dividends you can earn on your money or interest paid to a bank. Bank debt is good when it is earning a return in excess what what it costs.
Key company data in the following chart comes from tmxmoney.com. Oil companies report there financials to TMX. https://money.tmx.com/en/
OIL (as of 11/11/2)
$ EPS P/E P/B % % YIELD
RTN RTN
EQUITY SSETS
SGY 4.66 5.27 .9 1.54 178 27 -
BTE 4.26 2.27 1.80 1.5 126.3 34.2 -
OBE 4.83 4.62 1.1 .54 69.7 30.6 -
NVA 7.27 2.99 2.3 1.4 82.9 37.6 -
CJ 5.22 2.68 1.9 1.15 79.7 44.3 -
CPG 5.85 3.76 1.60 .64 54.3 27.9 2.05
BNE 6.59 4.14 1.60 .63 50 16.8 -
TVE 3.68 0.66 5.5 1.33 28.9 14.5 3.36
BIR 7.66 .33 21.5 1.2 5.6 3 0.28
WCP 7.25 3.28 2.2 1.25 87 38 3.72
PEY 10.95 0.64 16.7 1.1 6.6 3 0.37
HWX 5.15 .07 68.9 3.3 3.34 2.71 -
ARX 12.63 .74 16.9 1.61 5.7 2.89 -
VET 12.93 5.15 2.50 1.12 57.7 17.14 -
CVE 16.07 .35 45.3 1.36 4.22 1.98 0.88
MEG 11.17 0.19 56.3 .96 1.67 0.8 -
SES 5.64 -.42 -13.7 1.4 -7.78 -3.4 .541
CR 3.30 -.06 51.8 .64 -1.24 -.71 -
ERF 12.83 -0.65 -19.4 4.8 -19.5 -6.4 1.3