Q: What should one do with Vermillion? In 3 short years, the management has taken this established company from $30 to under $ 9.00, while having an established company, and selling at world prices. Should one have hope, or move to a better managed company. If so, which O & G company would you recommend
5i Research Answer:
VET is down 64% over three years (from today). The TSX sector index is up 9.7% in the same period. Certainly performance has been horrible. It restarted its dividend at the start of this period, and has since more than doubled it (6c to 13c). But cash flow (operating) has gone from $1.8B in 2022 to $967M last year. Part of this has been oil prices, of course. The stock is very cheap at 10X earnings with a 5.83% dividend. But others are just as cheap. TOU (gas focused), CNQ or WCP we think would be 'better' overall. We could argue for a HOLD on VET on valuation and balance sheet but the other ones have proven themselves over time and likely have better growth prospects.