Number Cruncher Extra

Number Cruncher Extra – Cenovus Energy Inc., Brookfield Infrastructure Partners L.P. & Shopify Inc.

By September 27, 2022 No Comments

In our last Number Cruncher we discussed how Cenovus Energy Inc. (CVE), Brookfield Infrastructure Partners L.P. (BIP.UN) & Shopify Inc (SHOP) are companies that have stood out from the crowd.

Here is the screener we used to find these stocks and that you can add to your personalized screeners.

Starting off with CVE

In the past 90 days, Cenovus’ SP score has increased by 10, bringing it up to 64. The SP score is derived from the Performance (63) and Risk (31.1) scores. The company has an impressive Momentum score of 82, and bias to Volatility and Growth, both with scores of 70. CVE experienced an incredible year, seeing a 1-year growth of 131.2% in Annual Sales. This is likely due to the steep increase in the price of oil.

 

Apart from the dip in the future growth value (FGV) that occurred at the beginning of the pandemic in 2020, Cenovus’ FGV had been relatively stable. The jump in FGV that occurred in early 2021 seems to have predicted the company’s rise in operating value. Now as the FGV decreases, it will be interesting to see if the current operating value will continue to increase, or if a pullback occurs and it is corrected to a similar pre-pandemic level.

Continuing with BIP.UN

Brookfield Infrastructure currently has a respectable SP score of 73, having increased by 7 over the past 90 days. The SP score is determined by their Performance (70.6) and Risk (22.3) scores. BIP.UN has volatility and quality bias with scores of 78 and 69 respectively. Impressively, annual sales have grown 30.3% over the past year.

 

According to our model, BIP.UN has an intrinsic value (IV) of $117.14 per share. While this is 57.1% lower than September of 2021, the IV has still grown by 1,711.5% in the past 5 years. Currently it is priced at $52.36, indicating that it is underpriced by the market which suggests that the company is attractive.

 

Now let’s look at SHOP

Shopify’s current SP score is 51, an increase of 11 over the past 90 days. The company’s SP score is determined through their moderate Performance (50.1) and Risk (46.2) scores. The company has quite a strong factor tilt towards growth, with a score of 72, and an increase in annual sales of 28.7% from last year.

 

Looking at Shopify’s Intrinsic Value, we can see that generous assumptions must be made to justify the current share price. First, assuming the company has another 10 years of high growth at 20% is optimistic. Next, looking at the company’s Return on Capital and Cost of Capital over the past 5 years. We can see that borrowing capital has been quite expensive, and the returns earned on that capital have been extremely low. If we assume that Shopify can correct this, by raising its return to 13.00% and lowering its cost of capital to 8.50%, only then will the company’s share price be considered fair.

 

If you have any questions about the article, feel free to contact Anthony :
Amenard@Inovestor.com

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