Cenovus, Encana, TransCanada: 3 Important Takeaways from Last Week’s Earnings

Conference call Q&A sessions remind us there is more to earnings season than just the top and bottom lines.

| More on:
The Motley Fool
You’re reading a free article with opinions that may differ from The Motley Fool’s premium investing services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn more

Every quarter we get unique insight into a company that goes beyond the headline earnings results. The insight comes in the form of quarterly conference calls, specifically during the question and answer period with analysts. Here are three important takeaways from last week’s round of calls.

1. Cenovus Energy (TSX: CVE) – July 24

Cenovus Energy didn’t have a spectacular quarter, as earnings per share didn’t come close to meeting analyst estimates. But the company’s conference call did give investors insight into a growing trend: oil by rail.

Many see rail as the near-term savior for relieving Alberta’s crude bottleneck. When asked about the future of crude in light of the recent tragedy in Quebec, CEO Brian Ferguson gave us some insight on Cenovus’ plan. You can read the entire conference call transcript here.

“We continue to believe, for Cenovus, that we can safely move crude by rail. We are targeting to have 10,000 barrels per day moving by rail later this year. We have committed to some medium-term leases on additional rail cars, which will see us in a position to move up to 30,000 barrels a day by rail next year.”

If Cenovus is any indication, Canadian oil producers are ready to embrace the oil by rail movement that has exploded in the U.S.

2. Encana (TSX: ECA) – July 24
The revamp is ongoing at Encana; earnings beat expectations as the company continues to increase its liquids production. CEO Doug Suttles has been on the job all of a month and a half, but on last Wednesday’s call he made his priorities clear:

1. Target and maximize cost efficiencies

2. Practice financial discipline, with specific focus on generating strong ROI

3. Achieve a year-end exit rate of 70,000 to 75,000 bpd of liquids production

4. Put Encana’s new strategy in place by the end of 2013

These are all tangible goals that can and should be tracked by investors when Encana releases third-quarter earnings. A turnaround is certainly possible at Encana, if management proves itself capable. Achieving stated goals is step number one.

3. TransCanada (TSX: TRP) – July 26
On Wednesday, TransCanada posted improved year over year results, but still missed analyst estimates.

It’s tough for investors to remember how diversified TransCanada is, given that the great majority of information we consume about the company consists of Keystone XL commentary, or the problems with the Mainline gas pipeline. The second quarter conference call reminded us not just of the company’s business segment diversity, but also of its geographic diversity. Karl Johnson, Executive Vice President and President of Natural Gas Pipelines for the company, had some insight on TransCanada’s opportunity in Mexico. You can read the whole transcript here.

“I think our position in Mexico is excellent. I think we have a very good base position right now. We’ve got, essentially, 3 projects under construction, 2 in the very early stages and 1 in the middle of construction. And a good presence in Mexico City with all the key stakeholders. So if the reforms do pan out and some of the existing infrastructure is available, I think that TransCanada will take a very serious look at it.”

Mexico’s energy reforms could drive quite a bit of business for North American energy companies. TransCanada already has its foot in the door, which bodes well for future growth, if and when reforms materialize.

Bottom line

Don’t miss out on the direction your company is headed by getting bogged down by the bottom line. There is plenty of insight to be gleaned by reading conference call Q&A’s every quarter.

While oil and gas related entities tend to steal the spotlight, savvy investors know that the real opportunities lie off the beaten path.  Rather than sticking to mainstream energy sources, your portfolio could be best served by uranium – the key ingredient for nuclear power. And with the global nuclear market ramping up in places like China, it could be a big winner. The Motley Fool has prepared a Special FREE Report that will clue you into the two best uranium companies in Canada. It’s called “Fuel Your Portfolio With This Energetic Commodity“. Click here and you can receive a copy at no charge!

The Motley Fool’s purpose is to help the world invest, better. Click here now for your free subscription to Take Stock, The Motley Fool Canada’s free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead.

Follow us on Twitter and Facebook for the latest in Foolish investing.

Fool contributor Aimee Duffy doesn’t own shares in any company mentioned at this time.  The Motley Fool doesn’t own shares in any of the companies mentioned.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

More on Investing

Profit dial turned up to maximum
Tech Stocks

$1,000 Invested in Constellation Software Stock Would Be Worth This Much Today

Constellation Software (TSX:CSU) is trading above $2,000 today. Why this stock is so expensive, and is it worth buying?

Read more »

Dividend Stocks

Passive Income: 3 Top Canadian Stocks to Buy for Monthly Dividends

Companies such as Pembina Pipeline and Killam Apartment REIT pay investors monthly dividends, making them top bets for income-seeking investors.

Read more »

Shopping card with boxes labelled REITs, ETFs, Bonds, Stocks
Stocks for Beginners

TFSA Investors: Top TSX Stocks to Buy With $6,000

Here are two safe, dividend-paying TSX stocks for your long-term portfolio.

Read more »

Gold medal
Investing

3 Growth Stocks That Could Be Huge Winners in the Next Decade and Beyond

Are you looking for growth stocks that could be huge winners in the next decade? Here are three top picks!

Read more »

Retirees sip their morning coffee outside.
Investing

Retirees: How to Make Over $95/Week in Passive Income TAX FREE!

Canadian retirees who are hungry for passive income should look to snag stocks like Sienna Senior Living Inc. (TSX:SIA) in…

Read more »

Man holding magnifying glass over a document
Investing

Where to Invest $500 in the TSX Right Now

Given the massive correction, long-term investors can start buying stocks like Shopify and goeasy to outpace the broader markets by…

Read more »

Aircraft wing plane
Investing

Air Canada Stock Is a Fantastic Deal Right Now

Air Canada (TSX:AC) is a great stock to own, as market fear turns into hope amid falling recession fears.

Read more »

Pixelated acronym REIT made from cubes, mosaic pattern
Investing

Beginner Investors: Get Passive Income by Investing in REITs!

You can get passive income by investing in REITs like Northwest Healthcare Properties REIT (TSX:NWH.UN).

Read more »