Veren Inc (VRN.CA) Stock Fundamental Analysis
Canada - Toronto Stock Exchange - TSX:VRN - CA92340V1076 - Common Stock
9.14 CAD
+0.34 (+3.86%)
We assign a fundamental rating of 5 out of 10 to VRN. VRN was compared to 206 industry peers in the Oil, Gas & Consumable Fuels industry. There are concerns on the financial health of VRN while its profitability can be described as average. VRN may be a bit undervalued, certainly considering the very reasonable score on growth
1. Profitability
1.1 Basic Checks
- VRN had positive earnings in the past year.
- VRN had a positive operating cash flow in the past year.
- VRN had positive earnings in 4 of the past 5 years.
- In the past 5 years VRN always reported a positive cash flow from operatings.
1.2 Ratios
- VRN has a Return On Assets (2.33%) which is comparable to the rest of the industry.
- VRN has a Return On Equity (4.04%) which is comparable to the rest of the industry.
- VRN's Return On Invested Capital of 8.09% is amongst the best of the industry. VRN outperforms 84.13% of its industry peers.
- VRN had an Average Return On Invested Capital over the past 3 years of 10.88%. This is above the industry average of 6.62%.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 2.33% | ||
| ROE | 4.04% | ||
| ROIC | 8.09% |
ROA(3y)7.48%
ROA(5y)2.06%
ROE(3y)11.73%
ROE(5y)-2.07%
ROIC(3y)10.88%
ROIC(5y)8.73%
1.3 Margins
- Looking at the Profit Margin, with a value of 6.88%, VRN is in line with its industry, outperforming 59.62% of the companies in the same industry.
- VRN's Profit Margin has declined in the last couple of years.
- The Operating Margin of VRN (27.16%) is better than 78.85% of its industry peers.
- VRN's Operating Margin has improved in the last couple of years.
- VRN has a better Gross Margin (72.71%) than 88.46% of its industry peers.
- In the last couple of years the Gross Margin of VRN has remained more or less at the same level.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 27.16% | ||
| PM (TTM) | 6.88% | ||
| GM | 72.71% |
OM growth 3Y-11.86%
OM growth 5Y3.88%
PM growth 3Y-56.49%
PM growth 5YN/A
GM growth 3Y-1.79%
GM growth 5Y-0.31%
2. Health
2.1 Basic Checks
- With a Return on Invested Capital (ROIC) just above the Cost of Capital (WACC), VRN is creating some value.
- The number of shares outstanding for VRN has been reduced compared to 1 year ago.
- VRN has more shares outstanding than it did 5 years ago.
- Compared to 1 year ago, VRN has an improved debt to assets ratio.
2.2 Solvency
- Based on the Altman-Z score of 0.04, we must say that VRN is in the distress zone and has some risk of bankruptcy.
- The Altman-Z score of VRN (0.04) is worse than 66.83% of its industry peers.
- The Debt to FCF ratio of VRN is 6.16, which is on the high side as it means it would take VRN, 6.16 years of fcf income to pay off all of its debts.
- Looking at the Debt to FCF ratio, with a value of 6.16, VRN is in the better half of the industry, outperforming 73.08% of the companies in the same industry.
- VRN has a Debt/Equity ratio of 0.37. This is a healthy value indicating a solid balance between debt and equity.
- VRN has a Debt to Equity ratio of 0.37. This is comparable to the rest of the industry: VRN outperforms 51.92% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.37 | ||
| Debt/FCF | 6.16 | ||
| Altman-Z | 0.04 |
ROIC/WACC0.89
WACC9.11%
2.3 Liquidity
- A Current Ratio of 0.57 indicates that VRN may have some problems paying its short term obligations.
- With a Current ratio value of 0.57, VRN is not doing good in the industry: 75.96% of the companies in the same industry are doing better.
- VRN has a Quick Ratio of 0.57. This is a bad value and indicates that VRN is not financially healthy enough and could expect problems in meeting its short term obligations.
- VRN has a worse Quick ratio (0.57) than 68.75% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 0.57 | ||
| Quick Ratio | 0.57 |
3. Growth
3.1 Past
- VRN shows a strong negative growth in Earnings Per Share. In the last year the EPS decreased by -53.13%.
- The earnings per share for VRN have been decreasing by -14.10% on average. This is quite bad
- Looking at the last year, VRN shows a very strong growth in Revenue. The Revenue has grown by 24.52%.
- The Revenue has been growing slightly by 6.66% on average over the past years.
EPS 1Y (TTM)-53.13%
EPS 3Y-14.1%
EPS 5YN/A
EPS Q2Q%-85.88%
Revenue 1Y (TTM)24.52%
Revenue growth 3Y11.97%
Revenue growth 5Y6.66%
Sales Q2Q%32.55%
3.2 Future
- The Earnings Per Share is expected to grow by 21.31% on average over the next years. This is a very strong growth
- VRN is expected to show a small growth in Revenue. In the coming years, the Revenue will grow by 4.59% yearly.
EPS Next Y189.53%
EPS Next 2Y52.32%
EPS Next 3Y21.31%
EPS Next 5YN/A
Revenue Next Year3.46%
Revenue Next 2Y2.34%
Revenue Next 3Y1.23%
Revenue Next 5Y4.59%
3.3 Evolution
- The EPS growth rate is accelerating: in the next years the growth will be better than in the last years.
- When comparing the Revenue growth rate of the last years to the growth rate of the upcoming years, we see that the growth is decreasing.
4. Valuation
4.1 Price/Earnings Ratio
- VRN is valuated rather expensively with a Price/Earnings ratio of 20.31.
- VRN's Price/Earnings ratio is in line with the industry average.
- VRN's Price/Earnings ratio indicates a valuation a bit cheaper than the S&P500 average which is at 28.82.
- With a Price/Forward Earnings ratio of 7.02, the valuation of VRN can be described as very cheap.
- Based on the Price/Forward Earnings ratio, VRN is valued a bit cheaper than 72.60% of the companies in the same industry.
- The average S&P500 Price/Forward Earnings ratio is at 25.95. VRN is valued rather cheaply when compared to this.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 20.31 | ||
| Fwd PE | 7.02 |
4.2 Price Multiples
- 86.06% of the companies in the same industry are more expensive than VRN, based on the Enterprise Value to EBITDA ratio.
- Based on the Price/Free Cash Flow ratio, VRN is valued a bit cheaper than 70.67% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 11.24 | ||
| EV/EBITDA | 3.57 |
4.3 Compensation for Growth
- The low PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates a rather cheap valuation of the company.
- VRN has a very decent profitability rating, which may justify a higher PE ratio.
- A more expensive valuation may be justified as VRN's earnings are expected to grow with 21.31% in the coming years.
PEG (NY)0.11
PEG (5Y)N/A
EPS Next 2Y52.32%
EPS Next 3Y21.31%
5. Dividend
5.1 Amount
- VRN has a Yearly Dividend Yield of 5.03%, which is a nice return.
- Compared to an average industry Dividend Yield of 3.29, VRN pays a bit more dividend than its industry peers.
- VRN's Dividend Yield is rather good when compared to the S&P500 average which is at 1.82.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 5.03% |
5.2 History
- On average, the dividend of VRN grows each year by 62.49%, which is quite nice.
- VRN has been paying a dividend for over 5 years, so it has already some track record.
- VRN has not decreased its dividend in the last 3 years.
Dividend Growth(5Y)62.49%
Div Incr Years3
Div Non Decr Years3
5.3 Sustainability
- VRN pays out 104.13% of its income as dividend. This is not a sustainable payout ratio.
- VRN's earnings are growing slower than its dividend. This means the dividend growth is not sustainable.
DP104.13%
EPS Next 2Y52.32%
EPS Next 3Y21.31%
Veren Inc / VRN.CA FAQ
Can you provide the ChartMill fundamental rating for Veren Inc?
ChartMill assigns a fundamental rating of 5 / 10 to VRN.CA.
Can you provide the valuation status for Veren Inc?
ChartMill assigns a valuation rating of 7 / 10 to Veren Inc (VRN.CA). This can be considered as Undervalued.
How profitable is Veren Inc (VRN.CA) stock?
Veren Inc (VRN.CA) has a profitability rating of 6 / 10.
How financially healthy is Veren Inc?
The financial health rating of Veren Inc (VRN.CA) is 3 / 10.
Can you provide the expected EPS growth for VRN stock?
The Earnings per Share (EPS) of Veren Inc (VRN.CA) is expected to grow by 189.53% in the next year.