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Cenovus Energy is Undervalued: Should You Bet on the Stock Now?
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Key Takeaways
Cenovus Energy trades at 5.97x EV/EBITDA versus the industry's 6.11x average.
High WTI prices are supporting Cenovus Energy's upstream operations and oil sands production.
Cenovus Energy faces higher second-half spending, early-2027 tax payments and carbon-tax uncertainty.
Cenovus Energy Inc. (CVE - Free Report) is currently considered undervalued on a relative basis, with the stock trading at 5.97x trailing 12-month Enterprise Value to Earnings Before Interest, Taxes, Depreciation and Amortization (EV/EBITDA), which is a discount compared with the broader industry average of 6.11x. ExxonMobil Holdings Corporation (XOM - Free Report) and Chevron (CVX - Free Report) , two other integrated energy majors, are valued at 9.24x and 7.76x, respectively.
Image Source: Zacks Investment Research
Such a discounted valuation often signals an entry point. However, before making investment decisions, one should consider the company's overall business environment and fundamentals.
High Oil Price Continues to Aid CVE’s Upstream Business
West Texas Intermediate (“WTI”) is currently trading above $85 per barrel, according to data from Oilprice.com, significantly higher than the shut-in and breakeven prices for existing wells in key resources. The escalation of conflicts in the Middle East has been aiding the rally in commodity prices.
In its latest short-term energy outlook, the U.S. Energy Information Administration (EIA) projects the WTI spot price to average $80.88 per barrel this year, a level that should remain supportive of upstream operations. As a result, CVE’s upstream operations are benefiting from higher benchmark oil prices, which are eventually increasing oil sands production. High oil prices are also benefiting other energy majors like XOM and CVX.
West Texas Intermediate Spot Average
Image Source: The U.S. Energy Information Administration
CVE’s Downstream Operations to Remain Strong
On the second-quarter 2026 earnings call, management noted that CVE’s refining business remained strong, with Canadian and U.S. refinery utilization at about 94% and 96%, respectively, supported by strong operational availability and favorable refined-product pricing.
Also, since it has exposure to Canadian heavy oil, which is cheaper than lighter crude, CVE is likely to be enjoying a feedstock cost advantage. In other words, the company’s Canadian refining business is capable of using lower-priced fuel to produce high-value end products, giving it an edge over other refiners and helping it continue its upward trajectory.
Should You Invest in the Stock?
Investors’ strong preference for the stock is getting reflected in the price chart. In the past year, CVE has jumped 117.1%, outperforming the industry’s 86.1% growth. XOM and CVX have surged 52.6% and 34.3%, respectively, over the same time frame.
Image Source: Zacks Investment Research
Investors should also know that Cenovus expects higher spending in the second half because of major refinery maintenance, while some large tax payments are due mainly in early 2027. It also relies heavily on outside condensate supplies and still faces uncertainty around Canada’s carbon-tax rules.
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Image: Bigstock
Cenovus Energy is Undervalued: Should You Bet on the Stock Now?
Key Takeaways
Cenovus Energy Inc. (CVE - Free Report) is currently considered undervalued on a relative basis, with the stock trading at 5.97x trailing 12-month Enterprise Value to Earnings Before Interest, Taxes, Depreciation and Amortization (EV/EBITDA), which is a discount compared with the broader industry average of 6.11x. ExxonMobil Holdings Corporation (XOM - Free Report) and Chevron (CVX - Free Report) , two other integrated energy majors, are valued at 9.24x and 7.76x, respectively.
Such a discounted valuation often signals an entry point. However, before making investment decisions, one should consider the company's overall business environment and fundamentals.
High Oil Price Continues to Aid CVE’s Upstream Business
West Texas Intermediate (“WTI”) is currently trading above $85 per barrel, according to data from Oilprice.com, significantly higher than the shut-in and breakeven prices for existing wells in key resources. The escalation of conflicts in the Middle East has been aiding the rally in commodity prices.
In its latest short-term energy outlook, the U.S. Energy Information Administration (EIA) projects the WTI spot price to average $80.88 per barrel this year, a level that should remain supportive of upstream operations. As a result, CVE’s upstream operations are benefiting from higher benchmark oil prices, which are eventually increasing oil sands production. High oil prices are also benefiting other energy majors like XOM and CVX.
West Texas Intermediate Spot Average
CVE’s Downstream Operations to Remain Strong
On the second-quarter 2026 earnings call, management noted that CVE’s refining business remained strong, with Canadian and U.S. refinery utilization at about 94% and 96%, respectively, supported by strong operational availability and favorable refined-product pricing.
Also, since it has exposure to Canadian heavy oil, which is cheaper than lighter crude, CVE is likely to be enjoying a feedstock cost advantage. In other words, the company’s Canadian refining business is capable of using lower-priced fuel to produce high-value end products, giving it an edge over other refiners and helping it continue its upward trajectory.
Should You Invest in the Stock?
Investors’ strong preference for the stock is getting reflected in the price chart. In the past year, CVE has jumped 117.1%, outperforming the industry’s 86.1% growth. XOM and CVX have surged 52.6% and 34.3%, respectively, over the same time frame.
Investors should also know that Cenovus expects higher spending in the second half because of major refinery maintenance, while some large tax payments are due mainly in early 2027. It also relies heavily on outside condensate supplies and still faces uncertainty around Canada’s carbon-tax rules.
Hence, investors shouldn’t rush to buy the stock. Those who have already invested may hold the stock. Cenovus Energy carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.