COG Fundamental Research Investment Analysis, Cabot Oil & Gas Corp.

Stock Research iPhone App Coming Soon to the AppStore Click here to register for newsletter and report access
close nav

Cabot Oil & Gas Corporation (COG)

The Razor's Edge

2-Year Price History

Recent Price
(12/3/2008)
$26.10
52-Week Price
$19.18 - $72.92
Market Capitalization
$2.7 Billion
Dividend Yield
0.50%
Most Recent Dividend
$0.11

About Cabot Oil & Gas Corp.

Cabot Oil & Gas Corporation is considered to operate in the Basic Materials sector. They specifically operate in the Independent Oil & Gas business segment contained within the Energy industry.

An independent oil and gas company engaged in the development, exploitation and exploration of oil and gas properties located in North America.

Ockham's Rating

Rating Specific Information Withheld Premium Access Only

COG Revenue

As a value investing shop, we are interested in seeing how COG's revenues measure up against past performances. One easily understandable way of doing that is to compare Price to Sales per share levels over a given time frame. Assuming it is available, Ockham prefers to look at ten years of history (for this stock there are 10 years of history available) and we weigh recent years more heavily. This allows us to find weighted average historical high and low Price to Sales ratios, which give us a better idea of the stock's current underlying value. Using this method, we have established a high range for Price to Sales of 4.54x and the low end of the range at 2.23x.

With respect to these historically rational metrics, notice that the current Price to Sales per share ratio for COG of 2.60x is well below its normal historic Price to Sales levels. At a price of $29.97, COG is 24% below where we would expect to see it. Clearly, this stock looks undervalued compared to historical levels, at least on a Price to Sales basis. This will positively affect our analysis because it is rare to find a stock this far below historical norms, and we would expect some price appreciation to bring this metric back towards a more normal range.

COG Cash Earnings

Looking at COG specifically in their Cash Earnings capabilities, Ockham views COG as significantly below its historical average multiple of Cash Earnings. Looking at the last 10 years we can get a good understanding of what investors have grown to expect from COG. For example, COG's Cash Earnings ratio per share has fluctuated between 5.50 and 10.96 over this historical timeframe. This range is based upon a proprietary weighted methodology at Ockham, but can clearly show an investor where COG is with respect to prior business periods.

So with COG's current price (latest close of $29.97) and most recent level of Cash Earnings reported, we see significant opportunity from a value perspective. At its current price level, COG is 29% below its average level of Price to Cash Earnings on a historical basis. This means that investors were willing to pay for a much higher stock price than currently for the same level of Cash in the past, on a relative basis. There are a couple of important things to remember, however. First, value doesn't exist in a vacuum. So if the market doesn't recognize this value, even a great disparity in Price to Cash Earnings cannot force an immediate stock price reaction. Second, patience is key when looking at securities that have reached these levels of Price to Cash Earnings versus their historical norms. So be patient with COG.

COG Dividends

When determining a company's future prospects for success, Ockham Research sees analysis of dividend payments as a key additional factor. Even though it isn't imperative for COG to shell out a dividend in order to receive a positive rating, it can be helpful to further our analysis.

The estimated annual dividend for COG is $0.12 producing a current dividend yield of 0.40%. Much like our evaluation of Sales and Cash Earnings per share, we review dividend yields from COG against the historic high and low levels over all available dividend history. Because dividends are a decision made exclusively by management, we view a healthy and rising dividend as a sign of confidence and strength. The highest dividend yield from COG over previous years was 1.07% while the lowest dividend yield was 0.16%. While it is quite common for a growth stock to pay no dividend at all, but for a mature company such as COG that has a history of paying dividends it is disappointing to see their dividend yield drop so significantly. At this time, the current dividend yield is 34.96% below the median yield.

Peer Comparison

:

Cabot Oil & Gas Corp. Industry Grouping

(12/3/2008)
Company Ticker Market Cap (Ml) Latest
Price
Price/Cash Earnings Price/Sales 5-Yr. Rev.
Growth Rate
5-Yr.
Avg. ROE.
Current 10-Yr. Range* Current 10-Yr. Range*
Peer Company Averages (not incuding COG) 3.78 3.00 » 19.07 0.55 0.92 » 9.27 17.58% 18.59%
*10 year range does not include current year values
Continental Resources, Inc. CLR $3.1 Billion $18.04 6.54 4.95 » 37.33 0.00 0.00 » 0.00 n/a 38.67%
BJ Services Company BJS $2.9 Billion $9.95 3.59 3.00 » 28.63 0.61 1.42 » 13.97 20.81% 22.14%
Cabot Oil & Gas Corp. COG $2.7 Billion $26.10 5.88 4.06 » 16.13 2.60 1.11 » 22.71 15.66% 20.28%
Newfield Exploration Company NFX $2.7 Billion $20.26 2.12 1.72 » 7.96 1.08 1.98 » 18.85 21.92% 15.24%
Enterprise GP Holdings L.P. EPE $2.5 Billion $18.06 3.09 2.40 » 7.24 0.08 0.23 » 0.47 n/a 9.00%
Pride International, Inc. PDE $2.5 Billion $14.47 3.58 2.95 » 14.18 1.00 0.99 » 13.08 9.99% 7.92%
Ockham Ratings & Analysis Report
Quarterly Access (100 Days) to:
Cabot Oil & Gas Corporation (COG)
Price$20
Ockham Research will send you updated investment ratings and research report access as new reports or ratings are published for a full 100 days from the purchase date. Rather than just one report or rating, Ockham Research is committed to updating our clients on every stock they care about on an ongoing basis.

For more information on all our product offerings, click here

Community Discussion

  • Be the first to Comment!

Key Fundamentals

COG - Cabot Oil & Gas Corporation Fundamentals
Price (12/3/2008) $26.10
Volume (12/3/2008) 1.8 Million
10 Day Average Volume 2.4 Million
13 Week Price Range $19.18 - $43.78
52 Week Price Range $19.18 - $72.92
LTM Revenue $907.2 Million
 
Shares Outstanding (12/2007) 103.4 Million
Market Capitalization $2.7 Billion
Shares Held By Institutions 95.1 Million
Insitutional Holders 382
% Shares Held By Institutions 92%
Earnings Per Share (EPS) $1.73
P/E Ratio 12.40
Book Value Per Share $16.17
 
Gross Margin 75.60%
Quarterly Dividend 0.12
Dividend Yield 0.50%
Beta 1.13
Fiscal Year Ends December