Should You Be a Buyer of Crescent Point Energy Corp. Following its Strong Q4 Report?

Crescent Point Energy Corp. (TSX:CPG)(NYSE:CPG) released fourth-quarter earnings on March 11, and its stock has reacted by rising over 3%. Should you be a long-term buyer?

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Crescent Point Energy Corp. (TSX:CPG)(NYSE:CPG), one of leading producers of crude oil and natural gas in North America, announced fourth-quarter earnings on the morning of March 11, and its stock has responded by rising over 3%. The company’s stock still sits more than 40% below its 52-week high, so let’s take a closer look at the results to determine if this could be the start of a sustained rally higher and if we should consider initiating long-term positions today.

The fourth-quarter results are in

In the fourth quarter of fiscal 2014, Crescent reported a net profit of $121.36 million, or $0.27 per share, compared to a net loss of $13.72 million, or $0.03 per share, in the same quarter a year ago, as its cash flow from operations increased 7.4% to $572.87 million. The company noted that these very strong results could be attributed to its total production increasing 20.5% from the year-ago period to a record 153,822 barrels of oil equivalents per day.

Here’s a quick breakdown of eight other notable statistics from the report compared to the year-ago period:

  1. Average daily production of crude oil and natural gas liquids increased 21.4% to 140,767 barrels per day
  2. Average daily production of natural gas increased 11.9% to 78.33 million cubic feet per day
  3. Average selling price of crude oil and natural gas liquids decreased 16.1% to $69.51 per barrel
  4. Average selling price of natural gas increased 6.9% to $4.17 per thousand cubic feet
  5. Cash flow from operating activities increased 28.3% to $651.85 million
  6. Capital expenditures increased 43.8% to $698.26 million
  7. Paid out dividends totaling $0.69 per share during the quarter for a total cost of approximately $310.46 million, compared to dividends totaling $0.69 per share for a total cost of approximately $274.8 million in the year-ago period
  8. Net debt increased 53.6% to $3.19 billion

Crescent also provided its outlook on fiscal 2015, calling for the following performance:

  • The production of approximately 140,600 barrels of oil and natural gas liquids per day
  • The production of approximately 71.4 million cubic feet of natural gas per day
  • Cash dividends per share of approximately $2.76
  • Capital expenditures of approximately $1.45 billion

Is now the time to buy shares of Crescent Point Energy?

I think the post-earnings pop in Crescent’s stock is only the beginning of a sustained rally higher, because it still trades at low valuations and because it pays a very high dividend.

First, Crescent’s stock trades at very inexpensive valuations, including just 23.6 times fiscal 2014’s earnings per share of $1.21 and only 19.9 times fiscal 2015’s estimated earnings per share of $1.43.

Second, Crescent pays a monthly dividend of $0.23 per share, or $2.76 annually, which gives its stock a very high 9.7% yield, and I think this makes it qualify as both a value and dividend play today.

With all of the information above in mind, I think Crescent Point Energy Corp. represents one of the best long-term investment opportunities in the energy industry today. Foolish investors should take a closer look and strongly consider establishing long-term positions.

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.

Fool contributor Joseph Solitro has no position in any stocks mentioned.

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