Dividend Stock Wednesday: Husky Energy (HSE-T)
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This is an analysis completed by The Dividend Guy. It is not to be used as investment advice or a recommendation to buy, hold, or sell any stocks discussed. Please ensure you complete your own analysis.
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Due to a recent post by The MoneyGardener on the strong performance of Husky Energy and the recent 21% increase in the company’s dividend, I ran the company through my dividend stock analysis machine. I was interested to see how the company’s EPS and revenue trend stacked up against its dividend performance. Also, given that I just paid $70 to fill up my truck at a Husky station, I have been thinking about a way to get some of my money back! Here is the results of that analysis.
The Company: Husky Energy (HSE-T)
HUSKY ENERGY INC. is an integrated energy and energy-related company. The Company’s operations include the exploration for and development of crude oil and natural gas as well as the production, purchase, transportation and marketing of crude oil, natural gas, natural gas liquids, sulphur and petroleum coke, and the upgrading and refining of crude oil and marketing of refined petroleum products.
| No | |
| No |
THE FUNDAMENTALS
Revenue
Click to EnlargeRevenue Scoring
| Criteria | Scoring |
| Consistenly Up with No Down Years | 1.0 |
| Up Trend with Less Than 2 Down Years | 0.5 |
| Choppy with Greater Than 2 Down Years | 0.0 |
| My Revenue Score | 0.0 out of 1.0 |
Earnings Per Share
Click to EnlargeEarnings Per Share Scoring
| Criteria | Scoring |
| Consistenly Up with No Down Years | 1.0 |
| Up Trend with Less Than 2 Down Years | 0.5 |
| Choppy with Greater Than 2 Down Years | 0.0 |
| My EPS Score | 0.0 out of 1.0 |
TOTAL FUNDAMENTALS SCORE: 0.0 out of 2.0
THE RATIOS
Return on Equity
Click to EnlargeReturn on Equity Scoring
| Criteria | Scoring |
| Above 15% for Last 5 Years | 1.0 |
| At Least One Year Below 15% in Last 5 Years | 0.0 |
| My ROE Score | 0.0 out of 1.0 |
Other Ratios
| Ratio | Criteria | Value | Score (Pass=1 / Fail = 0) |
| Debt to Equity | Less Than 0.50 | 0.24 | 1.0 |
| Payout Ratio | Less Than 60% | 35% | 1.0 |
| Credit Rating | BBB+ | BBB+ | 1.0 |
| Total Ratio Score | 3.0 out of 3.0 |
TOTAL RATIOS SCORE: 3.0 out of 4.0
DIVIDEND DATA
Annual Dividends
Click to EnlargeDividend Scoring
| Criteria | Scoring |
| 25+ Years of Dividend Growth | 1.0 |
| 10+ Years of Dividend Growth | 1.0 |
| Less Than 10 Years of Dividend Growth | 0.0 |
| My Dividend Growth Score | 0.0 out of 2.0 |
TOTAL DIVIDEND GROWTH SCORE: 0.0 out of 2.0
STOCK VALUATION
| Valuation Metric | Criteria | Value | Score (Pass=1 / Fail = 0) |
| Dividend Yield | Cur Yld Greater Than 10 Yr Avg Yld | 5.4% | 0.0 |
| Div Yld Compared to SPY Div Yld | Cur Yld Greater Than SPY Yld | 3.8% | 1.0 |
| P/E Ratio | Cur P/E Less Than 10 Yr Avg P/E | 21.1 | 1.0 |
| Relative P/E | Relative P/E Less Than 1.0 | 0.74 | 1.0 |
| Price to Sales | Less Than 1.5 | 1.29 | 0.0 |
| Total Ratio Valuation Score | 3.0 out of 5.0 |
Canadian Shareowner’s Association Stock Selection Guide Software Buy Price
| Buy Zone |
Maybe Zone |
Sell Zone |
Current Price | Rating | Scoring (Buy=1.0, Other=0.0) |
| 1.0 |
TOTAL STOCK VALUATION SCORE: 4.0 out of 6.0
SUMMARY
Points Earned:
7 out of 14 – half points are rounded down to be conservative
The stock is rated LOW with 7 points earned through my analysis of the stock. Although this stock has seen some very strong EPS and revenue growth, it has been choppy. Companies with choppy performance such as this can see pretty crazy swings in stock price which can be difficult to hold. Yes, the company has had very strong dividend growth in the past couple of years, my data from the CSA shows a rather sketchy dividend past. I am comfortable waiting on this one until we have more consistent dividend performance. In addition, oil and gas prices are high right now and some caution must be taken when buying energy stocks. I have not idea what it going to happen in the future, but it pays to be prudent when it comes to investing.
| Rating | Points Required |
| High | 11+ points |
| Medium | 8-10 points |
| Low | < 8 points |
Reminder: This is an analysis completed by The Dividend Guy. It is not to be used as investment advice or a recommendation to buy, hold, or sell any stocks discussed. Please ensure you complete your own analysis.
The Dividend Guy does not own shares in HSE
9 Comments on this post
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moneygardener said:
Thanks for the link. For a dividend growth investor, consistency is an issue for commodity plays like this. Aside from Exxon and maybe a few others you would be hard pressed to find consistnency in dividend and earnings growth. I chose to ignore Husky’s long term choppiness and buy it for the resource exposure and current emphasis on dividend growth and growing production. Yes, oil is high now, but I switched the exposure out from my Petro Canada holdilng so it really doesn’t matter where oil is to make that trade. That being said, it’s difficult to not really take a hard look at adding energy exposure to a portfolio, even at these levels because these stocks have low correlation with the usual dividend growth firms in finance, consumer, etc. Most energy companies are not pricing in the current price/barrel of oil anyway; and if it is a long term hold being bullish on oil prices makes them a pretty solid investment.
May 7th, 2008 at 6:02 am -
Dividend Growth Investor said:
Pretty choppy past. I wonder if commodity prices were to fall, whether or not companies like Husky would start freezing or cutting their dividends?
May 7th, 2008 at 7:34 pm -
moneygardener said:
They likely would if we saw a significant reduction in price/barrel, and they ran into production issues at the same time. I can’t seem them cutting due to low commodity prices alone though, as they base much of their planing on lower oil than today.
May 7th, 2008 at 8:25 pm -
Dave said:
Thank-you so much for your analysis. I’ve learned a lot.
Just wondering… do ever go beyond your point system for analysing stocks and rate companies by your gut feeling?
Have you thought about making a podcast?
Thanks again!
May 25th, 2008 at 12:43 am
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