Q: Hi Peter and Team,
Can you please provide thoughts on investing in CES Energy Solutions CEU as a long term play on growth in volume in the energy sector rather than counting on just the commodity price like producers do?
They appear to be doing well, getting added to Dividend Aristocrat index in February but I see a bit of mixed signals in the comparison of cashflow and net income this year vs. last even though revenues are growing.
Thanks!
Can you please provide thoughts on investing in CES Energy Solutions CEU as a long term play on growth in volume in the energy sector rather than counting on just the commodity price like producers do?
They appear to be doing well, getting added to Dividend Aristocrat index in February but I see a bit of mixed signals in the comparison of cashflow and net income this year vs. last even though revenues are growing.
Thanks!
5i Research Answer:
CEU is currently trading at 16X earnings, with a 1.24% dividend. The stock is up 12% YTD and 59% over one year. Consensus calls for 16% EPS growth this year. The balance sheet has some debt, about 2X cash flow. The last quarter did miss estimates. Insiders own 5% and have been recent buyers. It is a solid service sector stock. Energy companies still seem more interested in dividends and buybacks than expanding production, but CEU still looks decent for the sector overall. The dividend has shown good growth over the past several years and likely has room for more bumps. We would see it as decent, and can be used to diversify energy sector producer holdings.