Thursday, 2 January 2014

A Look at Ensco


You’ll see why I recently bought 200 shares of ESV (Ensco) below.

Average Dividend Yield Analysis*

ESV PLC
Year
High Price
Low Price
1Q
div.
2Q
div.
3Q
div.
4Q
div.
Annual Dividend
High Yield
Low Yield
2003
$31.10
$23.58
$0.025
$0.025
$0.025
$0.025
$0.10
0.42%
0.32%
2004
$34.15
$24.95
$0.025
$0.025
$0.025
$0.025
$0.10
0.40%
0.29%
2005
$50.34
$29.25
$0.025
$0.025
$0.025
$0.025
$0.10
0.34%
0.20%
2006
$58.75
$37.36
$0.025
$0.025
$0.025
$0.025
$0.10
0.27%
0.17%
2007
$67.61
$45.00
$0.025
$0.025
$0.025
$0.025
$0.10
0.22%
0.15%
2008
$83.24
$22.38
$0.025
$0.025
$0.025
$0.025
$0.10
0.45%
0.12%
2009
$51.30
$22.04
$0.025
$0.025
$0.025
$0.025
$0.10
0.45%
0.19%
2010
$53.93
$33.33
$0.025
$0.35
$0.35
$0.35
$1.08
3.23%
1.99%
2011
$60.31
$37.39
$0.35
$0.35
$0.35
$0.35
$1.40
3.74%
2.32%
2012
$61.48
$41.63
$0.375
$0.375
$0.375
$0.375
$1.50
3.60%
2.44%
2013
$65.82
$51.01
$0.50
$0.50
$0.50
$0.75
$2.25
4.41%
3.42%
2014


$0.75
$0.75
$0.75
$0.75
$3.00


Dividends are recorded in the quarter they were paid.
11y ave
1.59%
1.06%
Stock prices are per calendar year.
5y ave
3.09%
2.07%







3y ave
3.92%
2.73%







5y
$97.17
$144.68







3y
$76.54
$110.03






Super Cheap
$68.01



The current yield on ESV shares of 5.30% ($3.00 / $56.57) is much higher than the 3 and 5 year average dividend yields of 3.92% and 3.09%, respectively.

Buying the stock at its low in 2013 would have earned you an initial yield of 4.41%. Using the current annual dividend, that corresponds to a stock price of $68.01 today (see “super cheap” price in the table above).

Graham Price

ESV’s 2010, 2011 and 2012 EPS were $3.80, $3.08 and $5.23. 3Y Ave EPS = $4.04.
ESV’s BV is $53.92.
Graham Price = SQRT (3Y Ave EPS * BV * 22.5) = $69.98

Cyclically Adjusted Price to Earnings Ratio

ESV’s 10Y Ave EPS = $4.07
CAPE = Stock Price / 10Y Ave EPS = $56.57 / $4.07 = 13.9
A CAPE below 20 is good.

Conclusion

ESV increased EPS from $0.71 in 2003 to $5.23 in 2012. That’s an increase of 7.4 times over 9 years.

The current share price is below my super cheap price, below Graham Price and has a CAPE below 20.

Moreover, S&P projects 2013 and 2014 EPS at $6.37 and $7.64, respectively.

The numbers are quite compelling.


*My method is not perfect as the stocks low price may have occurred before the annual dividend increase.

6 comments:

  1. That is explosive growth, will have to take a peek at Ensco! I'm not familiar with them.

    ReplyDelete
    Replies
    1. If ESV keeps on the same path, dividends will keep growing at a healthy pace given forecasted EPS. To quote Mike Karpenko, "Pure yumminess."

      My cash for HCP is still not available :( and I'm leaving for Jamaica later today. My purchase may have to wait until my return in a week.

      Cheers.

      Delete
  2. Looks interesting. Thanks for the analysis. I will have to take a look at this one.

    ReplyDelete
    Replies
    1. Hi AA. What I read before buying ESV left me the the impression that mgt plans for the future, which was another plus. Let me know if you come up with anything bothersome.

      Take care.

      Delete
  3. I too brought shares after finding out about ESV in your last post. Thanks!!! :)

    ReplyDelete
    Replies
    1. Welcome fellow owner! Other energy companies I'm looking into include OXY, CVX, HP and RIG. I'd also like to add to my BP, share price permitting.

      Delete