RE:RE:RE:We are even right now....They could be keeping their powder dry for an acquisition but it hardly neccessary considering they have no problem going back to the well if cash is needed in such a case so they may as well slap that cash down on net debt and save the interest costs until it is needed again. It the same reason they didn't just stuff the cash required to pay their tax bill in an account and let it earn interest until that tax bill came due. The simply save more in interest charges on the net debt paid down they would earn in an interest bearing or short term investment.
The arbitrary $4B debt floor target ceased to be arbitrary when they set it. The market tends to punish a companies stock when management does not stick to targets both ways. We got the 50% returns promised in buybacks dividends and a special dividend and the 100% is around the corner when the balance sheet will allow it. If you throw another 50% of FCF at shareholder returns how do you expect to reach debt targets ever?
The difference between a 4.,5% guaranteed GIC and a 2% yield on a stock is the price targets of 50 to 100% gains from the current share price that the consensus of analysts have assigned this stock. When this stock gets to the $4B debt floor and shareholder returns become 100% of FCF, if the stock hits the low of analysts price targets then buybacks are probably over so what form are the shareholder returns going take? Dividends. At over $3B in FCF estimates for 2023 that could send the yield to 5% at that 50% (low estimate) share price target. Thats a gamble I am willing to take over a guaranteed 4.5% that makes me pay tax on the full gain.
https://seekingalpha.com/article/4570436-cenovus-energy-plus-6-percent-yield-could-be-on-the-cards You do you
GLTA Longs
Cabarete1 wrote:
Me thinks that they want to keep their powder dry in hopes for another aquisition.