Analyzing ConocoPhillips, a Low Dividend Grower
Why did COP’s revenues fall in 2015 and 2016?
ConocoPhillips’s (COP) revenues and other income fell 44.0% and 21.0% in 2015 and 2016, respectively. Lower revenues from crude oil, natural gas, natural gas liquids, and others drove this fall.
Revenues from the US and international regions recorded a drop in both years, with the exception of Malaysia. Equity in earnings of affiliates and other income dropped in 2015, which was offset by a gain on dispositions.
In 2016, the fall in equity in earnings of COP’s affiliates and a gain on dispositions were offset by other income. The rate of the decline in its revenues decelerated in 2016 with the recovery in the industry.
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Why COP recorded negative EPS in 2015 and 2016
ConocoPhillips’s (COP) costs and expenses decreased 17.0% and 22.0% in 2015 and 2016, respectively. Its exploration expenses and impairment rose significantly in 2015 before decreasing in 2016.
COP’s interest expenses increased in both years. As a result, income from continuing operations turned negative in 2015 after falling 177.0%. It fell another 24.0% in 2016 and remained in negative territory. These factors resulted in negative EPS (earnings per share) in 2015 after falling 165.0%.
COP’s EPS remained in negative territory in 2016 after falling 19.0%. The rate of the decrease in its EPS declined in 2016. The company’s share buybacks enhanced its 2015 EPS.
The iShares Select Dividend ETF (DVY) is a dividend ETF with 10.0% exposure to energy. DVY has a PE ratio of 20.3x and a dividend yield of 3.0%. The First Trust Value Line Dividend Index ETF (FVD) is a dividend ETF with 3.0% exposure to energy. It has a PE ratio of 20.4x and a dividend yield of 2.1%.