CVR Energy Q3 Earnings: Time To Buy Struggling NYSE:CVI Stock?

in EARNINGS/INVESTING IDEAS by

CVR Energy, Inc. (NYSE:CVI) is scheduled to report Q3 earnings results after markets close for trading on November 2, 2020.

The company is expected to report earnings of -$0.50/share on revenue of $1.128 billion. The consensus earnings per share (EPS) of -$0.50/share is based on a poll of 6 analysts and represents a decline in eps of −142.5% over the same quarter last year, when the company reported earnings of $1.18/share.

The revenue forecast of $1.128 billion based on a poll of 3 analysts implies a year-over-year (YoY) decline in revenue of −30.4%. Last year the company reported $1.622 billion in revenue for the quarter.

Expected to report EPS of -$0.50/share for Q3, 2020
Metric Expected Prior Year YoY Change
Revenue $1,128.29 $1,622.00 −30.4%
EPS -$0.50 $1.18 −142.5%

Earnings Call Trends

Historically, management has exceeded analyst expectations 7 out of the last 8 tracked quarters, and missed expectations 1 quarter.

What are your expectations from CVR Energy, Inc. for earnings this quarter? Let us know in the comments!

Analyst Expected vs. Reported EPS
Quarter Expected Reported Surprise Result
Q2, 2020 -$0.46 -$0.44 5.3% Beat
Q1, 2020 -$0.60 -$0.09 84.9% Beat
Q4, 2019 $0.56 $0.44 −21.6% Missed
Q3, 2019 $0.76 $1.18 55.4% Beat
Q2, 2019 $1.12 $1.16 3.2% Beat
Q1, 2019 $0.52 $1 93.4% Beat
Q4, 2018 $0.78 $0.83 6.1% Beat
Q3, 2018 $0.84 $0.95 13.1% Beat

In the following table, we summarize the company’s stock price movements after earnings releases. The “Price Day Prior” column shows the closing stock price on the day before the earnings report, and the “Price Next Day” column shows the stock price at the end of the trading day after the earnings report. After the last earnings report for the period ending June 30, 2020, the stock price reacted by falling −7.8%.

Stock Price Performance After Earnings
Report Date Price Day Prior Price Next Day Change % Result
August 3, 2020 $19.20 $17.70 −7.8% Decline
May 7, 2020 $20.41 $21.93 7.4% Increase
February 19, 2020 $33.23 $35.07 5.5% Increase
October 23, 2019 $44.71 $44.46 −0.6% Decline

The other question to consider is one of earnings manipulation. There is a lot of pressure on management each quarter to deliver on earnings expectations. The Beneish M-Score is a statistical model that provides some insight into whether the company might be manipulating earnings. With a Beneish M-Score of −2.49, the model suggests that the company is not likely to be an earnings manipulator. A value of −2.49 implies a 0.6% chance of earnings manipulation.

Fundamentals And Technical Analysis

CVR Energy, Inc. is currently trading at $11.21/share, down −6.3% for the day. The company is trading at approximately 23.1% of its 52-week high of $48.43/share. The company’s stock price is down −36.7% since the last earnings report and down −4.5% over the previous week.

The company’s 14 Day Relative Price Index (RSI) of 36.52 suggests the company is trading in technically neutral territory. The RSI is considered overbought when above 70 and oversold when below 30.


NYSE:CVI Stock Price Chart
Source: Finbox

The current share price implies a price-to-earnings (P/E) multiple of 15.87 and a forward P/E multiple of −7.24.

CVR Energy, Inc.’s current share price also implies a price-to-book (P/B) multiple of 0.96. The following table summarizes some other key fundamental ratios:

Data as of October 27, 2020
Metric Value
Last Reported Fiscal Period Key FY2020.Q2
Period End Date June 30, 2020
Stock Price (Current) $11.21
P/E Ratio 15.9x
P/E Ratio (Fwd) −7.2x
PEG Ratio −0.2
Total Debt / Total Capital 54.8%
Levered Free Cash Flow $171 million
EV / EBITDA 5.8x

Finbox

CVR Energy, Inc. is a small-cap stock with a market capitalization of $1.127 billion and a total enterprise value of $2.303 billion. The company operates in the Energy sector and the Oil, Gas & Consumable Fuels industry.

CVR Energy, Inc., through its subsidiaries, engages in petroleum refining and nitrogen fertilizer manufacturing activities in the United States. The company operates through two segments, Petroleum and Nitrogen Fertilizer. The Petroleum segment refines and markets gasoline, diesel fuel, and other refined products. It owns and operates a coking medium-sour crude oil refinery in southeast Kansas; and a crude oil refinery in Wynnewood, Oklahoma, as well as supporting logistics assets. This segment primarily serves retailers, railroads, farm co-operatives, and other refiners/marketers. The Nitrogen Fertilizer segment owns and operates a nitrogen fertilizer plant in North America that utilizes a pet coke gasification process to produce nitrogen fertilizer products; and a nitrogen fertilizer facility in East Dubuque, Illinois that produces nitrogen fertilizers in the form of ammonia and UAN. It primarily markets UAN products to agricultural customers; and ammonia products to agricultural and industrial customers. CVR Energy, Inc. was founded in 1906 and is based in Sugar Land, Texas.

Expertise: financial modeling, mergers & acquisitions. Andy is also a founder at finbox.io, where he’s focused on building tools that make it faster and easier for investors to do investment research. Andy’s background is in investment banking where he led the analysis on over 50 board advisory engagements involving mergers and acquisitions, fairness opinions and solvency opinions. Some of his board advisory highlights: - Sears Holdings Corp.’s $620 mm spin-off via rights offering of Sears Outlet, Hometown Stores and Sears Hardware Stores. - Cerberus Capital Management’s $3.3 bn acquisition of SUPERVALU Inc.’s New Albertsons, Inc. assets. Andy can be reached at andy@finbox.io or at +1 (516) 778-6257.

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