Video Summary: CEO bets Husky Energy will cross the free cash flow finish line

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Here is the video summary of the July 31st INK Morning report where we take a look at Husky Energy's (HSE) journey back to free cash flow.

INK Research and Canadian Insider are both subscriber-supported. We do not accept payments from issuers or promoters for stock coverage.

Script:

Husky Energy expects to deliver $800 million in free cash flow this year and $3 billion by 2023.

If the company succeeds, it would reverse a trend of falling free cash flow per share. A year ago, the company generated $1.00 per share in trailing twelve months free cash flow based on Refinitiv data. However, as of June 30th of this year, that number turned to negative 54 cents per share as the company continued to commitment capital to growth projects to boost production.

In Q2 the company reported EPS of 36 cents versus 44 cents the year before. Although production fell 9% to an average 268,400 barrels of oil equivalent/day (boe/d) compared Q2 2018, the company stuck to its guidance for the year of producing up to 305,000 boe/d.

Nevertheless, investors remain in a show me the money mood, with the share price off more than 50% over the past year.

That leaves Husky with some of the most attractive valuation in the sector. For example, its trailing 12-month P/E is 7.2 compared 15.8 for its integrated peers and 14.4 for the entire sector.

CEO Robert J. Peabody seems to be betting that Husky will cross the free cash flow finish line. He has been buying recently and that should provide investors with some encouragement.

Our report which is not a recommendation to buy or sell securities is available through INKResearch.com or the Canadian Insider Club at CanadianInsider.com.  Good luck friends and thanks for listening!

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