MEG Energy (MEG) AI Stock Analysis

• Market Cap: C$6.70B
• Dividend Yield: 1.52%
• Average Volume (3M): 1.06M
• Price to Earnings (P/E): 11.2
• Beta (1Y): 1.33
• Revenue Growth: -10.66%
• EPS Growth: 13.34%
• Country: CA
• Employees: 473
• Sector: Energy
• Sector Strength: 50
• Industry: Oil & Gas Exploration & Production
• EPS (TTM): 0.82
• Shares Outstanding: 254,378,040
• 10 Day Avg. Volume: 615,041
• 30 Day Avg. Volume: 1,056,687
• PEG Ratio: 0.45
• Price to Book (P/B): 1.47
• Price to Sales (P/S): 0.00
• P/FCF Ratio: 9.24
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: C$26.83
• Price Target Upside: 1.04% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 6

• Rating: 74 Outperform
• Price Target: C$30.00 ▲(12.95%Upside)

MEG Energy's overall stock score reflects its strong financial performance and attractive valuation. The company's effective cost management, robust cash flow, and strategic focus on capital allocation support a positive outlook. However, technical indicators suggest caution due to potential overbought conditions, and corporate events indicate some operational risks.

Positive Factors

Asset Quality

MEG Energy Corp remains one of the top picks due to its top-tier in-situ asset and capitally efficient growth trajectory, which could translate into one of the strongest delivered yields within its peer group.

Capital Returns

Execution on return of capital continues with 6.7 million shares repurchased, representing approximately 3% of the float.

Free Cash Flow

MEG Energy generated $168 million of free cash flow, returning all of it to shareholders through its base dividend and share repurchases.

Negative Factors

Operating Costs

Higher-than-expected operating costs were offset by stronger bitumen realizations.

Valuation

MEG's shares are trading at a valuation generally in line with its North American large-cap peers, but its efficient oil sands assets, higher-than-average growth trajectory, and strong 'delivered' yields suggest it warrants a premium.

MEG Energy Business Overview & Revenue Model

Company Description

MEG Energy Corp. is a Canadian oil sands company focused on sustainable in situ oil sands development and production in the southern Athabasca region of Alberta. The company specializes in the production of bitumen through innovative steam-assisted gravity drainage (SAGD) technology and is committed to enhancing resource recovery while minimizing environmental impacts.

How the Company Makes Money

MEG Energy generates revenue primarily through the extraction and sale of bitumen, a heavy crude oil found in the Athabasca oil sands. The company utilizes steam-assisted gravity drainage (SAGD) technology to efficiently extract the bitumen, which is then blended with diluents for transportation and sold to refineries. MEG's revenue streams are heavily influenced by global oil prices, production volumes, and transportation capacity. Additionally, MEG employs hedging strategies to manage commodity price volatility and has partnerships and contracts in place to ensure access to key markets, which significantly contribute to its earnings.

MEG Energy Financial Statement Overview

Summary

MEG Energy demonstrates a strong financial position with effective cost management and robust cash flow generation. The company maintains low leverage and has a stable equity base, contributing to its financial stability. Despite minor revenue fluctuations, the firm manages to sustain healthy profitability margins, indicative of strategic operational efficiency.

Income Statement

MEG Energy's TTM (Trailing-Twelve-Months) income statement shows a strong gross profit margin of 29.31% and a healthy net profit margin of 11.57%. The company has demonstrated resilience with its EBIT margin at 18.07% and an EBITDA margin of 27.73%. Despite a slight decline in total revenue, the company maintains robust profitability metrics, indicating effective cost management.

Balance Sheet

The balance sheet reflects a solid equity structure with a debt-to-equity ratio of 0.24, indicating low leverage and financial stability. The return on equity for the TTM is 13.50%, which suggests decent profitability relative to shareholder equity. An equity ratio of 68.04% further emphasizes the firm's stable financial position.

Cash Flow

MEG Energy's cash flow statement reveals a strong operating cash flow to net income ratio of 2.13, underscoring robust cash generation relative to earnings. The free cash flow to net income ratio is 1.17, indicating efficient capital use. Although free cash flow decreased slightly compared to the previous year, the overall cash flow position remains strong.

Breakdown	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	5.74B	6.11B	6.34B	4.40B	2.30B
Gross Profit	1.89B	1.97B	2.63B	1.67B	61.00M
EBITDA	1.40B	1.46B	1.89B	1.07B	210.00M
Net Income	507.00M	569.00M	902.00M	283.00M	-357.00M
Balance Sheet
Total Assets	6.74B	6.90B	7.03B	7.59B	7.22B
Cash, Cash Equivalents and Short-Term Investments	156.00M	160.00M	192.00M	361.00M	114.00M
Total Debt	1.10B	1.38B	1.82B	3.03B	3.20B
Total Liabilities	2.19B	2.37B	2.65B	3.79B	3.72B
Stockholders Equity	4.55B	4.53B	4.38B	3.81B	3.51B
Cash Flow
Free Cash Flow	792.00M	900.00M	1.51B	359.00M	153.00M
Operating Cash Flow	1.34B	1.35B	1.89B	690.00M	302.00M
Investing Cash Flow	-501.00M	-478.00M	-354.00M	-281.00M	-189.00M
Financing Cash Flow	-860.00M	-896.00M	-1.73B	-165.00M	-216.00M

MEG Energy Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 26.56
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Positive
• RSI: Neutral
• STOCH: Negative

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TSE:MEG, the sentiment is Positive. The current price of 26.56 is above the 20-day moving average (MA) of 26.04, above the 50-day MA of 24.50, and above the 200-day MA of 23.94, indicating a bullish trend. The MACD of 0.38 indicates Positive momentum. The RSI at 63.67 is Neutral, neither overbought nor oversold. The STOCH value of 90.01 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for TSE:MEG.

MEG Energy Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
WCP	80 Outperform	$11.86B	6.24	16.40%	7.54%	5.56%	35.85%
SCR	77 Outperform	C$7.04B	9.93	12.43%	3.65%	796.07%	-35.52%
Sector *	75 Outperform	€12.75B	15.04	12.28%	5.13%	3.28%	-1.80%
MEG	74 Outperform	C$6.70B	11.17	13.64%	1.52%	-10.66%	13.34%
PEY	69 Neutral	C$3.86B	12.89	11.17%	6.86%	2.80%	-7.94%
PSK	65 Neutral	C$5.55B	25.24	8.08%	4.41%	1.73%	3.68%

MEG Energy Corporate Events

MEG Energy Board Recommends Rejection of Strathcona’s Offer

MEG Energy’s Board of Directors has advised shareholders to reject Strathcona Resources Ltd.’s unsolicited offer to acquire MEG shares, deeming it inadequate and not in the best interest of shareholders. The board highlights that the offer exposes shareholders to inferior assets and potential market risks due to Waterous Energy Fund’s significant ownership, which could lead to downward pressure on share prices. MEG Energy emphasizes its strong financial position and growth potential, supported by its robust asset portfolio and strategic investments, as reasons for pursuing a standalone strategy or seeking superior offers.

The most recent analyst rating on (TSE:MEG) stock is a Hold with a C$25.00 price target. To see the full list of analyst forecasts on MEG Energy stock, see the TSE:MEG Stock Forecast page.

MEG Energy Resumes Operations at Christina Lake Post-Wildfire

MEG Energy has announced the resumption of operations at its Christina Lake Regional Project following disruptions caused by regional wildfires. The company has successfully restored its connection to Alberta’s electric grid and restarted Phase 2B operations after a turnaround, highlighting the support received from emergency responders and the dedication of its employees and contractors. This development marks a significant step in stabilizing MEG’s operations and ensuring continued energy supply, reinforcing its position in the energy sector.

The most recent analyst rating on (TSE:MEG) stock is a Hold with a C$25.00 price target. To see the full list of analyst forecasts on MEG Energy stock, see the TSE:MEG Stock Forecast page.

MEG Energy Evacuates Staff and Manages Production Amid Wildfires

MEG Energy has safely evacuated non-essential personnel from its Christina Lake Regional Project due to nearby wildfires, while maintaining critical staff on site. The wildfires have caused a power outage affecting the startup of the company’s Phase 2B operations, delaying approximately 70,000 barrels per day of production. MEG is leveraging its cogeneration capabilities to continue production and is working with stakeholders to restore full capacity.

The most recent analyst rating on (TSE:MEG) stock is a Hold with a C$25.00 price target. To see the full list of analyst forecasts on MEG Energy stock, see the TSE:MEG Stock Forecast page.

MEG Energy Advises Shareholders Against Immediate Action on Strathcona’s Takeover Bid

MEG Energy has advised its shareholders to refrain from taking any action regarding an unsolicited takeover bid by Strathcona Resources. The company’s Board of Directors, supported by financial and legal advisors, is evaluating the offer and will provide a recommendation within 15 days. MEG remains committed to its long-term strategy and has terminated its automatic share purchase plan due to the takeover bid.

The most recent analyst rating on (TSE:MEG) stock is a Hold with a C$25.00 price target. To see the full list of analyst forecasts on MEG Energy stock, see the TSE:MEG Stock Forecast page.

MEG Energy Responds to Unsolicited Acquisition Proposal by Strathcona Resources

MEG Energy has acknowledged Strathcona Resources Ltd.’s announcement of an intention to make an unsolicited offer to acquire all outstanding common shares of MEG. The MEG Board of Directors is set to evaluate the offer once received and advises shareholders to refrain from taking any action until a formal review and recommendation are made. MEG has appointed BMO Capital Markets as its financial advisor and Burnet, Duckworth & Palmer LLP as its legal advisor.

The most recent analyst rating on (TSE:MEG) stock is a Hold with a C$25.00 price target. To see the full list of analyst forecasts on MEG Energy stock, see the TSE:MEG Stock Forecast page.

MEG Energy Confirms Director Elections and Key Resolutions at Annual Meeting

MEG Energy Corp. announced the successful election of all ten nominees as directors at its annual shareholder meeting, reflecting strong shareholder support. Additionally, the appointment of PricewaterhouseCoopers LLP as auditor and the approval of unallocated restricted share units and executive compensation approach were confirmed, indicating stable governance and strategic alignment with shareholder interests.

MEG Energy Reports Strong Q1 2025 Financial Results with 24% Growth in Funds from Operations

MEG Energy reported a 24% increase in funds from operations per share for the first quarter of 2025, highlighting its strong financial foundation and potential for substantial growth in free cash flow despite uncertain commodity prices. The company achieved a production rate of 103,224 barrels per day and returned $185 million to shareholders through share repurchases and dividends, maintaining its 2025 operating and capital guidance.

MEG Energy Reports Strong Q1 2025 Financial Results with 24% Growth in Funds from Operations

MEG Energy reported a 24% increase in funds from operations per share for the first quarter of 2025, highlighting its strong financial foundation and operational excellence. The company achieved a production rate of 103,224 barrels per day and generated $380 million in funds from operations, with a free cash flow of $223 million after capital expenditures. MEG Energy returned $185 million to shareholders through share repurchases and dividends, maintaining its operational and capital guidance for 2025. This performance underscores MEG’s strategic positioning for long-term success despite uncertain commodity price environments.

MEG Energy to Release Q1 2025 Results and Host Conference Call

MEG Energy announced its first quarter results for 2025, which will be released on May 6, 2025, after market close. The company has scheduled a conference call for May 7, 2025, to discuss these results. This announcement is significant for stakeholders as it provides insights into the company’s operational performance and market positioning in the energy sector.